 What is a budget? Budget. A budget is a plan for how to spend money. Using a budget helps you know how much money you can spend each month. It can also help you save money. Gross income. Earnings are how much money you get paid. Your gross income is the total of how much money you earned in a pay period before taxes are deducted. Taxes. Everyone pays taxes. Taxes are paid to the government for things like social security and Medicare. These taxes are deducted from the money you earn at your job. Net income. When you get a paycheck, taxes are subtracted from your gross income. The amount you get paid after taxes are taken out is your net income. Stick to. When you stick to your budget, it means you are following your spending plan. If you follow your plan, you will know how much money you spend. Plan. Making a plan helps you organize ideas. A budget is a type of plan to help you manage your money. You can plan how to spend your money and how to save it. Fixed expenses. Every month, you pay for certain things like rent or a car payment. These expenses are called fixed expenses because the amount is the same each month. Variable expenses. Every month, you pay for certain things like water and electricity. These expenses are called variable expenses because the amount is different each month. Savings. A savings account is a place to keep money to use later. The money you save is called your savings. Savings can be for college, retirement, or for a special purchase. Spending. When you use money to pay for something, you are spending money. A budget helps you keep track of your spending and how much money you use. Payment. A payment is something you make when you owe money. Payment can be for fixed expenses like rent or for variable expenses like utilities. The end.