Budget Balance — Money Square · Investopia
A budget is a plan for where each coin will go before you spend it. At home, adults work out if the money coming in will cover the expenses.
A budget is a plan for where each coin will go before you spend it.
The Story
At home, adults work out if the money coming in will cover the expenses. A balanced budget means you don’t spend more than you earn.
A simple rule, shared by American professor Elizabeth Warren and her daughter in a 2005 book, suggests 50% for needs, 30% for wants and 20% for saving. It’s not a law—every family changes it to suit themselves. The main thing is to write down the plan and compare it to what you actually spent.
Key Ideas
- Need: Something you really must have, like food, a home or your school bus pass.
- Want: Something nice to have, but you can live without it—like a new game.
- Income: Money you get, such as pocket money or a salary.
- Expense: Money you spend when you pay for something.
Step by Step
- Write down how much money comes in.
- Make a list of your needs and their costs.
- Decide how much to save.
- Whatever is left can go on wants.
- At the end of the month, compare your plan with what you spent.
Your Turn
Use the pocket money balance here: divide 20 LC between the three jars until it’s balanced.
Educational simulation with fictional LeoCoins. Not financial advice and no buy or sell recommendations. Companies in the game are invented. Real money decisions are for adults — talk to a trusted adult.
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