Budgeting



TaxBrackets.org, via Flickr

Liz Waid and Ryan Geertsma look at budgeting. They look at how to make a money plan, and how to know where your money goes.

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Transcript


Voice 1

Welcome to Spotlight. I'm Liz Waid.

Voice 2

And I'm Ryan Geertsma. Spotlight uses a special English method of broadcasting. It is easier for people to understand, no matter where in the world they live.

Voice 1

Michael never seems to have any money. His employer pays him every two weeks. But, within those two weeks his money always seems to disappear. Michael does not know where his money goes. He cannot remember where he spends all of it! And sometimes he does not even have enough money to buy the things he really needs. Sometimes Michael cannot even pay his rent! Michael has a real problem.

Voice 2

Many times people get into trouble when they spend money. They spend too much! That is why a budget is so important. Today's Spotlight is on budgeting. Budgets can help people know how they are spending their money. Keeping a budget can be difficult. But in today's program we tell how to create a budget that will work for you!

Voice 1

While we discuss budgets we will give some examples. Please remember that the dollar amounts are just examples. They do not represent everyone. But the ideas are good for any amount of money!

Voice 2

On an earlier program we talked about two different money plans. One kind of money plan tells people to spend, spend, spend! Then if there is any money left, people can give or save. But this is a bad money plan. Many people already spend too much. People who follow this plan are often in debt.

Voice 1

But there are other ways to manage money. One of these plans is the 10-10-80 plan. Money experts created this simple plan. In the 10-10-80 plan, people should first give ten percent of their money. Giving helps people experience great joy. Then people should save ten percent for the future. And finally, people can spend the last 80 percent wisely.

Voice 2

So, how do you spend your money wisely? The best way is to make a budget! To start a budget, you first need to know how much money you have in a particular amount of time. Many people keep monthly budgets. So, they need to know the average amount of money they have each month. Other people keep weekly budgets. These people must know how much money they will have in one week. Today, we will describe a weekly budget. But the same ideas can be used for a monthly budget.

Voice 1

Second, you need to know what you spend your money on - your costs. Budgets put all costs into separate groups. For example, food is one group. Food is a cost that all people have. Other groups can include car costs, school costs, or home costs like electricity or water use. Entertainment costs might include money you spend on eating at a restaurant or seeing films. These are all costs.

Voice 2

Everyone has different cost groups. To discover your cost groups, you can start by writing down everything that you buy for one or two weeks. And we mean everything! If you buy fruit at the market, write down the amount you spent. If you buy a sweet from the store, write it down. When you pay a bill, write it down. Keep a list of all your costs for one or two weeks. Do not miss a cent! After this time, look at your costs. Separate them into the correct groups with similar costs in the same group. You may have only a few cost groups. Or, you may have many cost groups.

Voice 1

The third step in making a budget involves doing some mathematics! You must subtract all the costs you collected from the amount of money you have each week. If the result is less than zero, then you have spent more than you have. You have spent too much. If the number is more than zero, then you have stayed within your budget! You can put the extra money into savings. Or you can put the extra money into next week's budget.

Voice 2

But what should you do if you have spent too much? Well, you will have to make some decisions about your costs. See if there are any costs you can avoid spending money on. Cut those costs from your list. Also, see if there are any areas where you can save money. Do you pay for electricity? Try turning off the lights after you leave a room. Or try leaving the lights off until dark.

Voice 1

Finally, the last step it to write out your budget. The first amounts you should put into your budget are ten percent for giving and ten percent for saving. Put these amounts into your budget first, so you do not forget. Then write out your cost groups. You must set apart a particular amount of money for each group. The number represents how much you can spend each week for that group. When the groups add up, they should not equal more than the money you have in one week.

Voice 2

For example, next to your food group, you could put $30.00. That means you should try not to spend more than $30.00 each week on food. Remember to give amounts to the important groups first. These are your needs like food, housing, and school costs.

Voice 1

After you have decided how much you can spend on the things you need, split up the other groups. You may find that you do not have a lot of money for some of the groups. But that is OK! It will force you to save money to buy the things you want. For example, after paying for your needs, you may only have $1.00 left for the clothes group. That just means you will have to wait to buy clothes. Each week you will add $1.00 to the clothes group. After a time you will have saved enough money to buy new clothes!

Voice 2

After making a budget it is important to continue writing down all of your costs. When you spend money, write the cost next to the correct group. This is how you will know if you are spending too much on one group. It will also let you know when you have saved enough money to buy special things for yourself like clothes, coffee, or a film.

Voice 1

Many people do not like keeping budgets. Budgeting is a skill. It takes a lot of work. Sometimes you may forget to write down the costs. Sometimes you may fail. Some weeks you may spend too much. But, you can always try again. Soon, budgeting will be easy. And the good results will help you continue budgeting. They will also help you to avoid debt!

Voice 2

The writer of this program was Rebekah Schipper. The producer was Liz Waid. The voices you heard were from the United States. Computer users can hear this program again on our website at www.radioenglish.net. This program is called "Budgeting."

Voice 1

If you would like to know more about budgeting you can visit the script page for this program on our website. There, we have included links to some simple budgeting work sheets. We hope you can join us again for the next Spotlight program. Goodbye.

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Some of the music in this program came from Podington Bear.

Question:

Do you follow a budget? Do you find it difficult or easy?

Comments


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witchdalat
said on March 14, 2011

to me, should we make budget for two kind of costs: one of fix cost and one of variety cost.To fix cost, we meet difficulty to cut down because is nescessary and unchange. To variety cost, we can adjust using to cut down cost, so we can equal in - out money flow.
Besides, we live in inflation period.We should account for this factor in forecast costs.

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Come_to_Daddy
said on March 15, 2011

A budget (from old French bougette, purse) is a list of all planned expenses and revenues. It is a plan for saving and spending.[1] A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods. In other terms, a budget is an organizational plan stated in monetary terms.

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GelezniyDen
said on March 19, 2011

Hello everybody and good afternoon all people in the world. I my current stay i live with my parents and of course i work but parents help me and i spend not much money for food home and other major costs and i always have enough money and i don’t create budget plan every month and of course i know how much money i spend i always try save my money.But when i leave my parents i will try use this very useful plan for save my money because my salary not very hight on current moment.

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D Nguyen
said on April 22, 2012

Thanks, I’ll try my best to make a budget and keep it.

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thanhdung07121985@gmail.com
said on May 31, 2013

I have lived independently and spent money for all of costs by myself.My salary is not high.
So I often consider carefully before deciding buy somethings.if it is very expensive and not necessary for my need,I will stop buying it.Every month I often separate my money logically into many cost groups such as cost for house rent,food,shopping,transport ...The rest amount will be saving money.
I think we should budget so that we can use saving money for future plan or nessary things in difficult economic condition nowaday!

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Mercy
said on April 08, 2014

Hi everybody I love this website… Greetings!!!

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kin chong
said on July 03, 2015

Budgeting is an important skill in life,I think so .I trying to use this skill to manage my money.It is really interesting for me right after I listen to this Spotlight programme.This budgeting skill really attracts me so much.Thank you Spotlight.

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Honneur
said on July 06, 2018

I use save more then 10% my money every month. It’s not difficult if we have discipline and self control. My system is very simple: I buy only what I need.

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Dela
said on July 14, 2018

Making budgeting is useful, needful because in this way we can keep supervision of both our costs and income too. I think we should follow the basic simple rule it means not spending money for needless things but rather to try to create any financial provision. In particular, we mustn’t run into debts on no condition! Making a money plan and spending money wisely is not so difficult, complex therefore we should get used to it!