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Managing your cash


© St. Petersburg Times, published September 7, 2000

Money Stuff:  Get it!  Spend it!  Keep it!Welcome back to the St. Petersburg Times' Newspaper in Education page. This year's series is about something we all love and wish we had more of: money. Throughout the school year, in this space you will find fun and informational stories about how to get, spend and keep money. Developed by the Florida Council on Economic Education, the series will explore such topics as personal finance, business etiquette and ethics, making decisions, managing your time and money and more, all geared toward you, not just your parents! We hope you enjoy this economic adventure.

Chapter 1 Finance

[Times art: Teresanne Cossetta]
When Aviva answered the phone on Saturday morning, Katherine excitedly asked, "Want to go see Lucy Pearl with me and Mike tonight? Mike can drive us. We could leave around six and stop for some pizza first.

Aviva's enthusiasm for the idea tempered quickly as she started doing the math. She'd gone to the movies the night before. Five dollars for the movie ticket, $1.79 for a soda. That left her, ummm, $3.21. She can't go to the concert, much less get pizza. Why does it seem her friends always have more money than she?

Aviva's friends each have different financial situations. Katherine's mom gives her $50 at the beginning of each month for her allowance. This means she can buy pretty much whatever she wants at the beginning of the month, even if she's often out of money by the end. Mike doesn't get an allowance. He earns about $50 a week at his part-time job. Even though he pays car insurance and gas expenses out of that money, it seems to Aviva that he usually has enough spending money.

Aviva's parents give her an allowance of $15 a week. The catch is that they insist she save $5 out of each week's allowance until she has at least $20; then she can spend it however she wants. Even though she likes the way it feels to have $25 or $30 saved up, it's frustrating when she doesn't have enough to hang out with her friends.

Having cash in your pocket definitely has its advantages. Cash is what you need to go out with friends, put gas in the car, order a pizza or buy a ticket to a concert. Cash feels like freedom; it's liberating. Cash feels like financial independence.

Moving toward financial independence means thinking about what you have now and where you want to be. It means looking at your spending habits and setting goals. Financial independence means understanding the basics of managing money and taking control.

What is your cash flow?

Click for larger chart

One way to take control of your finances is to understand your cash flow. Cash flow is the amount of money you earn (money in) and the amount of money you spend (money out). Do you know what you spend your money on? Lots of times, money seems to slip through your hands before you even realize it. Follow your cash for one week and see if you can get a better idea of where your money comes from and where it goes.

First, add up all the money you get in a week. This should include money you earn, allowance, lunch and other money for school. Then use the chart on this page to track every penny you spend during the next week. Yes, that means even the dollar you spend on a soda from the machine at school and the two bucks you give your friend for gas money on Friday night.


Another step in getting control of your finances is making a realistic monthly budget. The one-week cash flow chart helped you track how you actually spent your money for a week, so you can use that information to help you make a plan for managing your cash each month. Your monthly budget is a good tool to help you move from thinking about your money as something that is only here and now to getting control of your money and thinking about the future.

To begin creating your monthly budget, use the budget planning box on this page. To make your budget really useful, you have to do more than plan it. You have to keep track of what you actually earned and spent for the month of your budget. Compare your actual income with your budget and see how close your estimate was.

Remember, staying on a budget takes commitment. When you are planning a budget, it is easy to decide that you are going to put half your income from your part-time job into saving for school after high school graduation. It can be hard to stick to your plan when there are other things you'd rather do with your income. But one thing is for sure: Having a budget and trying to use it gives you a much greater chance of taking control of your cash flow than working without a plan at all.

One last thought on budgets. Budgets are about what you expect to happen. But sometimes things change, and your real-life income and expenditures don't turn out the way you expected them to. What if you didn't get as many hours at your part-time job as you thought you would? What if your car battery needed to be replaced, and you forgot to include car repairs in your monthly budget? What if your sister forgot to return the video she rented on your account and now you have a $20 charge?

Don't give up! Just take a good look at the things that are different about your income and expenses than you thought they would be when you made the budget, and use this new information to make an adjusted budget for the next month. Then get back on track and try again. The more you practice at budgeting, the better you'll get.

Budget Chart

What do you think?

At the beginning of this story, Aviva was frustrated about her cash situation. Think about your own circumstances. How is your situation different? Do you think Aviva is being realistic in her concerns?

When Aviva looked at her weekly cash flow, she was surprised at how much she spent on fast food snacks.

What if?

What if Aviva got a part-time job? Do you think this would solve her cash flow problems? What kinds of things do you think she should consider before she makes a decision like that? How would you advise her?

* * *

Sharon Hodges and Barry Friedman are authors of "Financial Freedom," a booklet on personal finance available free through the Florida Council on Economic Education.

About the Florida Council on Economic Education

Money Stuff was developed by the Florida Council on Economic Education, a statewide, non-profit organization founded in 1975 to educate teachers and students about the free enterprise system and to instill in them an appreciation for a market economy. For information on the council's programs for teachers and students, call (813) 289-8489.

Program director: Fonda Anderson

Newspaper in Education

The St. Petersburg Times devotes news space to NIE features throughout the year, including this classroom series. The Times' NIE department works with local businesses and individuals to enrich the classroom experience by providing newspapers, supplemental guides and educational services to schools in the Tampa Bay area. To find out how you can become involved in NIE, call (727) 893-8969 or (800) 333-7505, ext. 8969.

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