LESSON 10

FORM 2
MANAGING INCOME EARNED

Budgeting

Budgeting can help someone spend his or her income/money wisely.

A budget - is an estimate of income and expenditure for a set period (weekly,

monthly). The budget shows the income/money expected for a period and how this
money/income should be spent.

Expenditure - is the amount of money spent on something.

Income - is the amount of money a person (or business) earns.

Financial Stability - refers to being able to meet basic needs each month and
have money left over for savings.

Debt – the state of owing money

A budget is important because:

- Guards against unplanned spending which cause us to spend more than we
should.
- Prevents financial instability over time. Financial instability occurs when
debts exceeds or more than income earned.

A budget plan matches planned spending to planned income, preventing creation

of large debts over time. It helps to identify savings that may be used to reduce
debt and maintain financial stability.

When drawing up a budget:

- Get organised and take your time when you plan your budget
- Add up all your income
- Work out your essential spending
- Work out your need spending and reduce it
- Work out the gap between income and spending
- Be honest about how you spend on needs
Benefits of having a budget:
Planning a budget enables people to use their money in the way they wish, helping
to ensure they spend wisely on the things they need and want. It also helps them to
identify what they can and cannot afford.
- It provides financial stability over a long period of time.
- Ensure persons donot spend money that they donot have
- Helps a person to understand any bad spending habits and change them
- Helps a person avoid worrying about paying bills
- Know whether there is spare money to save or to spend on luxuries
- Helps a person keep out of debt

Activity
What are some things persons can do to manage their income and keep their
budgets?
LESSON 10
FORM 2
MANAGING INCOME EARNED

Budgeting

Budgeting can help someone spend his or her income/money wisely.

A budget - is an estimate of income and expenditure for a set period (weekly,

monthly). The budget shows the income/money expected for a period and how
this money/income should be spent.

Expenditure - is the amount of money spent on something.

Income - is the amount of money a person (or business) earns.

Financial Stability - refers to being able to meet basic needs each month and
have money left over for savings.

Debt – the state of owing money

A budget is important because:

- Guards against unplanned spending which cause us to spend more than we
should.
- Prevents financial instability over time. Financial instability occurs when
debts exceeds or more than income earned.

A budget plan matches planned spending to planned income, preventing creation

of large debts over time. It helps to identify savings that may be used to reduce
debt and maintain financial stability.

When drawing up a budget:

- Get organised and take your time when you plan your budget
Examples of budgets
DISCLAIMER

The notes above is no mine but taken from the following books:
‘Secondary Social Sciences for Trinidad and Tobago 2’ by Lisa Greenstein,
Daphne Paizee & Bruce Nicholson

‘Social Sciences My Self, My World Book 2’ by Anthony Luengo