Debit Cards V Credit Cards
When you’re under 18, you’re lucky! You can’t get into trouble with credit cards as you are under the legal age! But a lot of young people are encouraged to get credit cards when they turn 18! Beware as misuse of a credit card is one of the easiest ways to get into debt.
Let’s first look at the differences between the two. A debit card gives you access to your own money, so you are limited to withdraw or spend only as much as is in your account. When you turn 18...
Budgeting Categories
A budget is about deciding how much money you want to spend on things each week. In deciding "how much" you need to be realistic, which will be much easier now that you've already looked into your current expenses.
At your stage you are unlikely to be paying many bills, and it's fairly simple to break up all of your spending into common categories.
The categories we will use are:
- Entertainment:
(including trips to the movies, sporting events, concerts, new CD's or DVD's – anything associated with enjoying yourself) - Clothing and Accessories:
(includes cosmetics and shoes) - Food and Drink
- Transportation
- Communication
(including mobile phone expenses, calls and internet) - Gifts
Everyone spends different amounts of different categories, for instance you may love eating out, and spend much of your money lunching with friends, but don't have a mobile phone. In this case you would have a lot of your money in the food and drink category, and much less in the communication category.
It's important to understand the proportion of your pay that goes into each category. Only then can you set realistic spending limits.
The next expense graphing worksheet will help you allocate your expenses to categories and see where the money's going! Have your expenditure list (from your Financial Reality Worksheet) and click here to download our expense graph sheet.
Now let's look at putting some limits on each category, and write up your budget.
