BUDGETING:

why is it important?

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WARM-UP

Answer the questions.

What comes to mind when you hear the word budget?

What are the advantages and disadvantages of budgeting?
Have you ever budgeted? If yes, share some thoughts about your experience.
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VOCABULARY

Match the words to make phrases. Read the article and check.

sick _______________________ pay

basic _______________________ bills
tight _______________________ fund
utility _______________________ goals
financial _______________________ needs
emergency _______________________ budget

set _______________________ fund

use _______________________ goals
allocate _______________________ overdraft
spend beyond _______________________ your means

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READING
Read four parts of the article and answer the questions.
Pay attention to the words and phrases in bold. What do they mean?

1) Budgeting gives you control over your money.

What are your basic needs? How much do you spend on them?
Do you spend beyond your means or save money and put it to good use?
Make a list of things that change your life for better. Do you allocate funds to them?
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2) Budgeting stops you from overspending.

Are the utility bills high in your country? Give some examples.
Have you ever used an overdraft to pay for something? What did you buy?
What are the disadvantages of using a credit card if you have a tight budget?

3) Budgeting helps you achieve your financial goals.

Do you set your financial goals? Why do you think it is important?

Why do you think some people spend all their paycheck?
Make a list of things that stop them to set money aside.
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4) Budgeting helps you prepare for emergencies.

How much money is enough to have as an emergency fund in your country?

Is it possible to live on sick pay if you can't work for a month? Why?
Do you feel financially burdened? Why? Why not?

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 SPEAKING
Read about some budgeting methods. Which is ideal for you? Why?
80/20 Budgeting
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The 80/20 is based on percentages and focuses
on two different categories: you will save 20%
of your salary to build your savings and the
rest 80% of your money on any expenses you
have during the month.
Extreme Budgeting
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The extreme budgeting rule is the practice of
purchasing only what is strictly necessary, not
spending a dollar on anything extra.
70/20/10 Budgeting
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The 70/20/10 is based on percentages and
focuses on three different categories: you will
spend 70% on living expenses which you can
split into fixed and variable, you will save 20%
of your salary to build your savings or pay off
debt and you will spend 10% of your budget
investing your money or donating it.
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60/40 Budgeting
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The 60/40 is based on percentages and focuses
on two different categories: you will spend the
rest 60% of your money on your basic needs
and allocate the other 40% of your salary to
four different categories: retirement savings,
long-term savings, short-term savings
and wants.
Reverse Budgeting
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Reverse budgeting is also known as paying
yourself first budget and figuring out what to
do with the rest of the money afterward.
Zero-Based Budgeting
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With zero-based budgeting, you allocate all
of your money to expenses, savings, debt
payments, investments, or any other
category you could think of.