One of the most important Financial Literacy skills is creating and following a financial spending plan or personal budget. A budget is simply a plan that outlines your income and your outgoing expenses, with the goal of making sure your expenses are not greater than your income.

Creating a Budget:

1. Record your spending. For one month, write down everything you spend money on. From your monthly rent and car payments down to that cup of coffee you bought on the way to class or that pizza you bought on the way home.
2. Evaluate your spending. Compare your monthly expenses to your monthly income. If your expenses are greater than your income, then you need to examine you spending habits and determine how to reduce your expenses. One way to do this is to prioritize your spending, ranking items in order of importance from basic living essentials to a daily cup of coffee.
3. Create a balanced budget. Make a spending plan where your monthly income is equal to or greater than your monthly expenses. To do this, you may need to eliminate some spending or find ways of reducing the expense of things you need.
4. Stick to your budget. Now that you have created your budget, it is important to follow and stick to your budget.

Saving Strategies:

1. Set up a savings account and contribute to it regularly. A healthy savings account can reduce the need to use a credit card for unforeseen expenses, such as car repairs or medical expenses.
2. Save more by spending less. Find less expensive options for items you need everyday or every week, like shampoo, paper towels, or laundry detergent. Watch for sales and use coupons when possible.

Budget Busters:

1. Buying things you want that you do not necessarily need.
2. Buying expensive items when less expensive items of equal quality are available.
3. Unforeseen expenses like car repairs and medical expenses. Having a savings account for emergency expenses can help you stick to your budget.