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1. Budgeting Basics


Budgeting and money management are generally not subjects taught in school or college. However, it is very important to be taught budgeting basics. Learning how to manage money and avoid getting into debt at a young age helps to build financially responsible adults.

In order to educate individuals in budgeting and financial management, it is vital to explain exactly what we mean by ‘budget’. We must also examine the key components of building a realistic and successful budget. provides a good budgeting definition: “A financial plan that takes income and expenses into account and provides estimates for how much you make and spend over a given period of time.” So budgeting basically means:

  • working out how much money you bring in either on a weekly or monthly basis
  • subtracting your bills and living expenses
  • deciding how your remaining disposable income can be allocated — either into spending or saving

The four key terms or components of money management and building a budget are:

  • Fixed Expenses — these are the expenses that stay the same each week/month such as rent/mortgage
  • Flexible Expenses — expenses that can vary month to month such as electricity and other utility bills
  • Total Expenses — this is your fixed plus flexible expenses combined
  • Disposable Income — the money that you have left after paying all bills and expenses

It is important to ensure when compiling your budget that you take into account all of your outgoings otherwise it won’t work. Groceries, eating out, petrol and transport and even regular bank charges must all be included. Also, any debt or credit card payments need to be factored in (but hopefully if good budgeting is learned early on these need not be a major factor). Once a realistic and accurate budget has been assembled, it is very important to set specific savings goals to help you manage your money. Some good examples of savings goals are an emergency fund, travel and holiday fund, education savings and a Christmas fund.

By learning how to budget, school leavers and young adults will be better equipped to start their further education or working lives with the ability to manage their finances. Debt, credit cards and payday loans are also big problems today and these will be discussed in the following blog article.