Discussion Question Unit (5) – Budgets

I believe it is important for teenagers and young adults to understand the concept of budgets/budgeting and the benefits that come along with it. A budget, also known as a “spending plan” and is an organized outline of income and expenses that can be used to set spending goals and track your earnings. Budgets are a smart financial tool for teens because it can help plan and save for certain expenses whether it be short term or long term. It can cut unnecessary spending habits because a budgeting plan shows what your money was put towards that month, seeing where you could have saved on certain things could make you wiser about future purchases. It’s not easy for a teenager to set aside a portion of their paycheck for saving purposes because it usually involves making sacrifices and spending choices. However, creating a budget benefits because it develops lifelong money management skills for a more successful financial future. Discretionary income is an individual’s income that is left after spending, investing or saving. It includes money spent on vacations, non-essential things and high priced luxury items that aren’t necessarily needed.  It relates to people’s spending and saving because discretionary income can become a habit and individuals would rather spend money on what they WANT than what they NEED. Tips that I find useful for creating a well-rounded budgeting system is to stay organized. Organization is key for someone trying to make a successful budget because you need to be able to see the amount of money coming in and what the funds are being spent on.  Having a certain percentage of your pay check set aside for savings included in your budget will ensure that you never forget to save. Lastly, a useful tip towards budgets is having a reliable way to do so whether it be in a notebook, an excel spreadsheet or a free template that allows you to make one.

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