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First Budget0/3 questions
In this lesson
  1. Introduction
  2. Four budget categories
  3. Budget money you actually have
  4. Example
  5. Put it into practice
  6. Check your understanding
  7. Official sources
  8. In short
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Build Your First Budget

Create a flexible money plan even if your income changes.

5 minutesBeginnerReviewed July 23, 2026Lesson 3 of 15
By the end of this lesson, you will be able to…
  • List the four categories of a simple teen budget.
  • Build a budget using only money you actually have.
  • Adjust a budget when income is irregular or changes.

A budget shows what comes in, what must be paid, what you want to save and what remains for spending. Teenagers often have irregular income, so start with a simple plan.

Key takeaway

A budget has four categories: money in, important spending, goals, and flexible spending.

Four budget categories

1. Money in — allowance, gifts, pay or side-hustle income.

2. Important spending — transportation, school costs, phone bills or responsibilities.

3. Goals — money saved for something specific or unexpected costs.

4. Flexible spending — food out, games, clothing and entertainment.

Budget money you actually have

Do not plan around income you only hope to earn. Use money you already have or can reasonably expect.

If income changes, use percentages or make a new plan whenever money arrives.

Key terms in this lesson
Budget

A plan that shows what comes in, what must be paid, what you're saving for, and what remains for flexible spending.

Flexible spending

Money not already assigned to important costs or savings goals — food out, games, clothing, entertainment.

Quick check

Which budget category would a school bus pass most likely belong to?

Example

Money in: $120 · Important spending: $25 · Savings: $45 · Flexible spending: $40 · Buffer: $10.

Sample monthly budget
Money in
$120
Important spending
$25
Savings
$45
Flexible spending
$40
Buffer
$10

Put it into practice

0/3 done
  1. Open the Teen Budget Builder tool.Open the Teen Budget Builder
  2. Enter your typical monthly numbers.
  3. Adjust until the remaining balance is zero or positive.
Check your understanding

3 questions

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Questions completed: 0 of 3

Question 1 of 3
Your planned spending is higher than your money in. What is the right response?
Question 2 of 3
Which four categories make a simple teen budget?
Question 3 of 3
Your income changes every month because your shifts vary. What is the most practical approach?

In short

  • A budget has four categories: money in, important spending, goals, and flexible spending.
  • Plan around money you actually have or can reasonably expect, not money you hope to earn.
  • If spending is higher than income, reduce or delay lower-priority items.
  • Rebuild the plan whenever your income changes.
Educational content only. TaxLoophole.ca provides general educational information and does not provide personalized tax, legal or financial advice. Rules may change and may differ based on your province, territory and circumstances. Verify important decisions with the Canada Revenue Agency, another appropriate government source or a qualified professional.

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