MSU Extension 4-H Youth Money Management

The idea of a budget can be intimidating to some people, especially if they don’t have any specific education or training in finances. However, with just a few key pieces of information, anyone can understand the basic structure and goal of a budget. Michigan State University Extension has many resources to help youth start their journey towards financial literacy.

A budget is simply a plan for what you are doing with your money; sometimes a budget is referred to as a spending plan. Budgets can be made for individuals, couples, families or groups. When you are working on your own individual budget, you get to make all the decisions, but it can be helpful to consult others if you are confused or need clarity. When you are working with others on a budget, learning how to communicate around the topic of money is crucial so you can build trust.

The two major concepts that a budget describes are money coming in and money going out. Money coming in is often called income, and money going out is often called expenses. Income for an individual may be pay from a job or gifts or scholarships. Income for a 4-H club may be from club dues, fundraisers or donations.

Expenses will look different for different people based on their values and choices. Expenses may include such things as rent, car payments, school supplies, food and groceries, and even fun things like going to the movies. For a 4-H club, these could include supplies to make a project, museum admission tickets for an educational field trip, Exploration Days registrations or fun things like group t-shirts.

Part of the budgeting process is to look at the big picture of what money you expect to have come in, and what you expect to spend money on in a given time period (month, year, etc.). Some of the numbers may have to be estimates in the beginning, but remember that a budget is just a plan and can be edited when you have better information. (For a group, this may involve more discussion as well as a vote on an amended budget.)

The category that is often the most confusing is savings. Many people want to think of savings as income. While it is true that at some point savings may become income and therefore available to spend on expenses, it is important to remember that in most months, savings is an expense: money going out (from income into a savings account). Saving money is a great way to plan for bigger expenses or to be ready for unexpected emergencies. It may be helpful to have a goal for your savings.

The first time you think about a budget, it may feel too complicated to wrap your mind around. However, remember that the most important concept is to simply understand how much money you have coming in (income) and how much money you have going out (expenses). Once you have this basic understanding, budgets won’t seem so overwhelming anymore

Michigan State University Extension and Michigan 4-H Youth Development help to prepare young people for successful futures. As a result of career exploration and workforce preparation activities, thousands of Michigan youth are better equipped to make important decisions about their professional future, ready to contribute to the workforce and able to take fiscal responsibility in their personal lives.