Cash Course: Different Ways to Budget | PragerU Kids

hey cash course fans before we start the show remember that you can get hundreds of free educational videos for all ages at pregnant kids.com subscribe today and never miss an episode Jenny we've been going out for a while now and well there's something I wanted to ask you yes Chris what budgeting method do you use oh I I don't know a mix of this and that but Ting has never been my strength I was afraid you'd say that are you breaking up with me no but I do have something for us waiter ma'am this gentleman has requested a special for you today budgeting methods budgeting is an important and necessary tool for managing your money but the tools you use to budget could be different depending on your circumstances and season of Life your budget will also look different from those around you including your parents or friends a good starting point for budgeting is the 503020 method in this method you set aside 50% of your income towards your needs 30% towards your wants and 20% towards your savings if you're new to budgeting this method is a simple way to get started get started you mean there's more of course there's more the 503020 method might work great but let's say you get a raise a whole 10% utilizing incremental budgeting allows you to start adjusting your previous budget when your needs change let's say you spend $1,000 monthly on food but you can now afford to bump that up to $1,100 with your rise that's an incremental change that can be done to any area of your budget if you really want to discipline yourself and see where your money is going consider envelope budgeting this involves putting your budget into actual envelopes with cash one envelope for food another for rent another for school supplies and and so on whatever the categories this method will help you spend and save more intentionally using plastic for all of your purchases may be convenient but you'll more likely make wiser choices when you pay in cash and see where your hard-earned money is going or perhaps your goal is a big purchase in which case paying yourself first budgeting could be useful this means putting aside more money toward a specific goal and then figuring out how to live off what's remaining if this leaves you with a tighter daily living budget you'll have to find areas to cut back until your goal is reached you may be eating Ramen for a couple of months but sometimes you have to live on the cheap now to enjoy the fine meal later now say there's been a major change in your finances due to changes in your job or living situation and your previous budget no longer works you may need to utilize zerob based budgeting and start from scratch this means creating a new budget and reconsidering your goals needs and expenses you can play around with the numbers to make a budget that fits your current situation better look at the next special it says we can do this one together oh tell me more that's called participative or negotiated budgeting and it involves two or more people working together to create a budget such as starting a business or working on a school project you can negotiate your budget based on everyone's needs and wants but be prepared to compromise to meet your shared goals I know what I want now me too before you decide take a look at today's special AC steps one decide what your priorities are after your Essentials are covered you have the flexibility to prioritize whether saving for a big ticket item or creating an emergency fund these priorities will determine how you build your budget this also means your budget will look different from your friends so don't be pressured by their priorities two get advice or helpful tools find a trusted family member or other expert who can review your budget and advise you on allocating your funds utilize budgeting apps spreadsheets or other online resources that can help you keep track of your finances three check in and update regularly budgets are made to change whenever your financial goal or income changes revisit your budget and ensure everything still checks out adjust where needed and watch for Unnecessary spending that doesn't contribute to your overall goals no matter what type of budgeting you use remember that it's a tool meant to help you not hinder you a wellth thought out budget can help you take control of your finances and prepare you for any surprises that may come your way when you finally achieve your goals you'll be grateful you had a plan and stuck to it do you want me to chip in oh no no I've been budgeting for this day for a long time that's the most romantic thing anyone has ever done for [Music] me watch more at Prager kids.com and parents don't forget to subscribe