Two friends have just taken a vacation on a very expensive private boat for themselves and their friends. One of them realizes that she's been spending too much money and needs to set limits. Her friend then explains to her the importance of budgeting and how to budget.
Traveling sure is fun, but I feel like I have been spending so much money that I've ran out! 1
Setting limits is a good way to start saving money, but there is more to that. 2
Really? Would you explain to me how to budget? 1
That sounds like a good idea! 2
Budgeting is a great way to prevent financial problems in the future. 1
Oh! That is a great idea! 2
In order to budget you need to have different fractions for the use of your money. 1
For example, you could save a fraction of your income money for anything, like an emergency, or something for the future. You can give away another fraction, and keep the last part of your income for yourself, to spend on anything you want!
That way I have a purpose for every dollar I spend! 2
Also, after budgeting for a while, you'll have enough money to get bigger and better things! And you'll have extra money! It is a very important skill to have! 1