“The simplest definition of a budget is ‘telling your money where to go.’”
― Tsh Oxenreider, author of “Organized Simplicity: The Clutter-Free Approach to Intentional Living.”
Previously, on BYJU’S Piggy Bank:
In Episode 1, we learnt about the concept of money. We now know that people earn money by working or receive money as a gift. People use their money to buy the things they need or want. In Episode 2 of BYJU’S Piggy Bank, we are going to discuss how people make spending decisions.
We will cover:
(Parents can read the sections at a pace appropriate for their child and then solve the worksheet together.)
People earn money so that they can spend it on things they need or want. Sometimes, they have money to buy everything they want or need, but there are occasions when they have to decide which specific items they will actually buy since they may not have enough money to buy everything on their list.
Have you ever had to pick between two things you liked, wanted, or needed?
It is hard, isn’t it – choosing just one thing out of everything you want or need.
Exercise: Think about a time when you had to pick between two things you really wanted. How did you decide?
Sometimes people want to buy many things but do not have enough money to buy them all. In such cases, they choose which things they need sooner and identify which things can wait for later. They do this so that they can fit all of their needs in their budget.
Budget (verb) means to plan carefully how much money to spend on something.
A typical household budget can be monthly, yearly, or for a particular event such as a birthday party or a holiday.
Exercise: Everyone needs to eat, so all households have a grocery budget. Make a list with all the grocery items that your parents would think of buying when going out to shop. Discuss your household grocery budget with your family. Try to find out the reasons for this budget.
People need and want different things, and earn different amounts of money, so everyone’s budget is different. They allocate their money differently.
Allocate (verb) means to give something officially to somebody/something for a particular purpose.
Exercise: Apart from basic needs like food, clothes, and shelter, what would you want to include in your budget when you grow up?
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Disclaimer: This blog has been written for children between the ages of 5 and 7. The information has been presented accordingly. Parental discretion is advised.
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