The Basics of Budgeting

What is a Budget? A budget is a plan for money – a breakdown of expected income and expenses for a specific period. It helps to determine if you can save or need to borrow money, or whether you should reconsider certain decisions to meet your priorities.

What makes up a budget? Income/Revenue:‘money in,’ incoming money, money received or earned Expenses/Expenditures:‘money out,’ outflow of money, costs, payment for goods and services

What is a balanced budget? A balanced budget is when your revenue and expenses match exactly. Revenues – Expenses = $0

What are other possible outcomes? Surplus: excess, when revenues exceed expenses, positive balance (+) (i.e. $10,000 rev - $8,500 exp = + $1,500) Deficit: deficiency, when expenses exceed revenues, negative balance (-) (i.e. $10,000 rev - $10,500 exp = - $500)

What is a debt? When you have a deficit, you will need to borrow money to cover the shortfall. The amount owing on borrowings is called a debt. It is the accumulation of a deficit.

Why budget? The budgeting process is an integral part of financial management for individuals, businesses, organizations and governments. This financial plan allows for the development of strategies for saving, borrowing and spending.

Discussion Questions What would happen if people, businesses or the government failed to budget their finances? Can you think of examples where it makes sense to take on a debt?

Debrief Do you think it is important for you to care about the federal budget? Are you concerned about your future? Are you confident that you will find a job that interests you? Why should the government be consulting with youth about the budget?