MAK: Hi, I’m Mak.

GRANT: And I’m G.

BOTH: And you’re here for money with Mak and G.

DAD: Money with Mak and G is brought to you by stock yards Bank and Trust assisting personal, commercial and private banking clients since 1904.

MAK: Wow, I can’t believe how much money we’re making now. It’s so much more than what we made with just our allowance.

GRANT: I know. Yeah, we’re basically rich.

MAK: But I still feel like I never have enough money.

GRANT: Yeah, I agree. I wonder how we could make more or make it go further?

MAK: I bet dad knows. Maybe it has something to do with our budgets.

GRANT: Wait, what’s a budget again?

MAK: It tells us where and how to spend our money based on our goals. Haven’t you been following yours?

GRANT: Maybe?

MAK: Yeah, we really need to talk to dad.

GRANT: Race you.

BOTH: Hey dad, what’s up, can you?

DAD: Whoa, slow down you two. You almost made me spill my coffee. Now what’s going on?

GRANT: We need a budget.

MAK: You see, we are making a lot more money than when we first started. So we want to make sure we know how to spend it.

GRANT: Yeah, there’s a lot of stuff I really want, but didn’t ever seem to have enough to buy it all. I’ve been wanting some new video games. I’m doing that Jonesing thing, dad.

DAD: Oh, really, you’re really craving it? Well, a budget looks at what your income is and where all the money goes. It comes from the Latin word Bolga, which means pouch. So you can think of it as everything that goes into your wallet, or purse and everything that comes out or is leftover.

GRANT: Did you say beluga like the whale?

DAD: No. Bolga. But at least I know you’re paying attention. Let’s first understand your income and expenses. That’s really the only two things you need to know.

MAK: So to put together a budget, you only need to know the money that comes in and the money that goes out.

DAD: That’s absolutely right. We’ll talk about your income in just a minute. But your expenses can be broken down between your needs and your once.

GRANT: I need video games. I’m Joneses for them, dad.

DAD: Good try G man. But needs are things like food, clothes and other items we can’t do without. I don’t want you running around without any clothes on.

MAK: Thanks for that, dad. Now I won’t be able to get that vision out of my head.

DAD: Sorry, it was to make a point. We want video games. But you need the basics, which are food, clothing and shelter. Another way to think about it are those expenses you have each month that you must pay. The other expenses that you choose each month are not mandatory.

GRANT: Is that like making the payment on our house and buying food?

DAD: Absolutely it is. You like to eat, right Grant? And I like to sleep on a soft, comfortable bed inside the house away from the animals and the rain.

MAK: Is my monthly phone bill a mandatory expense? I think I’m required to pay it since we signed a contract.

DAD: Yep, that’s true. You should be very careful what you make mandatory because sometimes it feels like things you want are really, really bad or mandatory. But they could just be one and they will weigh you down. You and I made a decision to get a phone to keep them safe and stay connected.

GRANT: But our other expenses, like going to the movies aren’t required. So those are once?

DAD: Yep, just desires.

MAK: Well, I’m glad you and mom take care of all of our mandatory expenses.

GRANT: Me too. I wouldn’t have enough cabbage to feed that.

DAD: This brings us to discretionary income. This is the amount leftover after you take out your monthly fixed or mandatory expenses. For you guys. It’s pretty simple. It’s the amount you have after you pay your phone bill. This is the amount left over that you can either spend or save.

GRANT: Did you say Pictionary like the game?

DAD: No, I said discretionary. It’s a fancy name for what you can choose to spend in the manner you want for the money that’s leftover.

MAK: Hmm, I never heard that word before. Even though I only have my phone to pay each month and you pay all the other bills, by the way. Thank you.

GRANT: Yeah, I’d hate to pay for the cars, gas, the house, food, clothes, air conditioning, and everything else. Wow, that’s tiring, just to say all those expenses. But I wanted a video game last week and I couldn’t get it.

DAD: Why not? G man?

GRANT: I didn’t have any money.

DAD: I thought you’d say that. It sounds like you both need to learn more about saving your money instead of spending it. If you don’t have enough now, it’s time to make a plan.

GRANT: Yeah, but I want it now.

MAK: Oh grant, you don’t want to live beyond your means? What now?

DAD: Haha Mak, good use of the money lingo. Grant, when someone is living beyond their means they spend more money than they actually have?

MAK: Really? I guess I didn’t really understand that very well. How can you spend more than you have?

DAD: You actually have to borrow money, which means you owe someone and you’ll have to pay it back later. When your money’s gone, then you don’t have enough money for the things you need, or for the important things like saving.

GRANT: A budget helps us not to do that, right?

DAD: Sure. Thing G. A good budget can help keep you out of trouble. But only if you stick to it. Kind of like bubble gum on your shoe.

MAK: Did you say trouble? Is that like saying a bad word like…

DAD: Well, not exactly. Say you borrow $100. But only make $10 a month, that would be 10 months, you couldn’t spend a penny, but you still have needs to pay for. So after all your needs, maybe only have $1 left.

GRANT: So that would take 100 months or over eight years to pay it back.

DAD: Yep.

GRANT: That doesn’t sound good. I don’t want that. No trouble for me. Sounds like that would hang over your head. So I need a budget. Now I think I remember having a budget. Is that true dad? Do we really have a budget?

DAD: That’s a good question. Your company has one because we tried to figure out all the money coming in and going out. Sounds like it’s time we helped create your personal budget.

GRANT: Good idea. Let’s make sure to budget for my new game.

DAD: Before we do that, I want to talk about one more thing.

BOTH: Ah.

DAD: Come on. It’ll be so much fun. You’ll barely be able to control yourself. Okay, you both currently have two streams of income.

GRANT: I like where this is going. Did you hear that Mak? Two streams of income?

MAK: I did. Sounds great to me, the more streams, the better. Hey, what’s a stream of income?

DAD: Well, well, if you think of a stream, it’s water that keeps flowing. So a stream of income is income that keeps flowing or coming to you. Do you know what your two streams are?

MAK: Income for pet sitting company and or allowance?

DAD: Bingo. Both of these streams can impact your budget. Do you know how to increase either of these?

GRANT: Oh, I got this just as you for a bigger allowance.

DAD: Really? What would you do to earn more allowance? Or were you just going to ask for more?

MAK: Dad? I think I know the answer to that. How about instead of more allowance? Grant, we sell more of our services. You know, get more customers.

GRANT: Oh yeah, I can get on board with that. We can also offer other stuff to do for our current customers.

MAK: Yeah, like Mr. Howard, we currently walk his dog twice a week. What if we also offered to give an old snickle for two baths.

GRANT: And charge more.

MAK: Thanks for catching up.

DAD: Okay kids. This is great. Growing your business creates more revenue and can provide you with more income, you’re on the right track. Before we work on your personal budget, how about you outline three ways you can each increase your income streams?

MAK: So basically come up with new ideas on how to either earn more allowance or earn more money for our company?

DAD: You got it.

GRANT: We can do that.

MAK: Leave it to us.

DAD: That’s the spirit, you two will be increasing your income before you know it, then we’ll get into setting a budget based on how much a cheetah you’ll be bringing home.

BOTH: Oh, dad.

DAD: We now have money coming in, which is awesome. But it takes a little practice to manage it. Understanding your mandatory expenses will help you understand how much you have leftover that you can use for fun or savings. That discretionary income, which is the amount leftover after your needs for Mak and G, there are only mandatory expenses for their phone bill. So that’s pretty easy: their earnings from their business plus their allowance minus their phone bill, that should leave a good amount they can spend or save. However, it sounds like they don’t have enough to cover some other ones. So they’re either not making enough or spending too much. Without a budget. It’s hard to know what’s really going on. Having a budget is awesome. You get to make decisions on how to spend your money. All you need is the money that comes in and goes out. It’s a powerful tool to realize where it’s all going. Plus your most important goals go on your budget, like saving for school, that new boat, getting out of debt and more. It would be like trying to build a house without a hammer. No one would expect you to be successful without it. We’ll talk more about this for sure. Now one interesting point with Mak and G was having two different income streams. This can be very helpful. If for instance, Mak and G don’t do their dog sitting business, then they still have their allowance. In our family, we try to keep several streams of income going at all times our primary work, some side jobs, income from investments and more. For some, it’s just not possible. But if you can, this diversity reduces the risk of hitting your goals and is a key component for keeping your finances on track. Okay, stay tuned for our next episode where the kids work on a budget to meet their goals.

MAK: Hey dad, I think we’re ready to make our budget.

GRANT: Yeah, we have a ton of ideas on how we can increase our income.