It's Your Money -- How Do You Manage It?

AN ARTICLE FOR MIDDLE SCHOOL STUDENTS

Got cash? Wish you had some? Think about how you get spending money and how you spend it.

Perhaps you consider yourself a good money manager already and save most of the money you get. If so, you’re on the right track.

You might have friends who blow an entire allowance at the mall on things they didn’t plan to buy. Later, when something comes along they really want or need, they try getting an advance on the next allowance. If this sounds more like you, learning a few money management basics will help keep more of your money in your pocket.

Cash-In

Perhaps you get an allowance for doing chores around the house; or you baby-sit for friends and relatives and take care of your neighbor’s plants or pets. In summer, you may do lawn work for neighbors or shovel sidewalks in winter to earn some extra cash. You might also get some extra money on special occasions like your birthday or holiday. The money you receive from work, gifts or allowances are examples of your income.

Cash-Out

Stopping for pizza after a movie; renting a video game; getting an extra drink from the vending machine at school; putting money into a savings account or making a donation to charity – are examples of expenditures. These are the things on which you spend your money.

Basic Budgeting

How satisfied are you with the spending choices you make? Maybe you wish you weren’t so hasty in spending your hard-earned money. Perhaps you’d like to save for college, a game system or a new bike, but don’t know where to start. You can learn how to manage your money better by starting with a basic budget or spending plan. A key to budgeting is to understand the difference between needs and wants.

Needs are things most of us need to survive. Shelter, food, transportation, and clothing are examples of needs your parent or guardian provide for you. Perhaps you are responsible for buying your own lunch at school from a weekly allowance you are given. These expenses are called fixed because week in, week out, we need to pay for them.

Wants are things that would be nice to have, but are not necessary to survive. While you may disagree, examples include going to the movies, eating out, buying name-brand clothing, CDs, video games and your own cell phone. The cost of things we want can vary, be reduced or eliminated, so we call these variable expenses.

Weekly Budget Worksheet

Budgets help you track your income and expenses. Completing a budget for a month will show you how much income and how many expenditures you really have and uncover some surprises. If you find at the end of the week or month you don’t have any money to save, or worse yet, you find you have more expenses than income, a budget will help bring your spending under your control.

Using the simple plan you see below, list all the sources of income under the first column. In the second column, list the dollar amount earned. Under Expenditures, list the purchases made. In the next column, include the amount spent.

Below is a typical budget from a fictional 7^th grader we’ll call Shawn:

Shawn's Budget:

Income (list source)	$ Amount	Expenditures (list expenses)	Amount Spent
Baby sitting	$20	Pizza with friends	$12.00
Allowance	$20	Movie	9.00
		New CD	16.00
		Soda & candy	2.25
Total	$40		$39.25

Oops…only 75 cents left from $40! With a completed budget, Shawn can plainly see there is very little left to put into a savings account and give to charity.

Re-Thinking Wants and Needs

Prioritizing is putting wants and needs in order of importance. Shawn can re-order the budget by deciding which expenses are more important than others.

When prioritizing, pay yourself first. That doesn’t mean keeping all of your income to spend as you want…decide on a certain percentage you will always put into a savings account before spending anything. You might decide that 25 percent is a good start, so if you have $40, you’ll put $10 away in savings. You will learn about savings accounts in another issue.

Next, consider getting into the habit of charitable giving. You can choose from a huge variety of legitimate charitable organizations such as your local church, synagogue or temple, animal shelters, food pantries, homeless shelters and so many more. If you want to make charitable giving part of your budget, decide on a percentage of what to give each week, perhaps 2 to 5 percent.

The remaining money is divided between things you need and want. Again, you will need to prioritize… which of the expenses in Shawn’s budget example would be more important? Which could be put off until next week or until more money is saved?

Shawn's Revised Budget:

Income (list source	$ Amount	Expenditures (list expenses)	Amount Spent
Babysitting	$20	Savings	$10
Allowance	$20	Charity	2
		Pizza with friends	12
		Movie	9
Total	$40		$33

The budget shows $7 remaining; not enough for a new CD this week, but Shawn can save it until next week and buy it then. Now, Shawn can feel good about saving some money for college; feel great about donating some money to a worthy cause and still have money for going to a movie and pizza parlor with friends.

Now, you try it…track your expenses this week so you can see where your money came from and where it went. Make a budget every week for the next month and you will be empowered to control your money.

My Budget:

Income (list source)	$ Amount	Expenditures (list expenses)	Amount Spent

My Revised Budget:

Income (list source)	$ Amount	Expenditures (list expenses)	Amount Spent

This information is provided by New York State Higher Education Services Corp. (HESC), the state agency that helps people pay for college. HESC is the nation's largest in-state loan guaranty agency and provides more grant and scholarship money to college students than any other state in the nation.

Free college and career planning help, federal and state financial aid information and online applications for government grants, scholarships and student or parent loans are available at the HESC Web site.


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