Home Budget

CONTENTS
What is Budget?
Types of Budget
What is Personal Budget?
Tools used for creating a personal budget
Following a Budget
Home Budget for Chopra Family
Example
For the Month of January
Bar graph
Pie chart
Conclusion
WHAT IS BUDGET ?
A budget is a list of all planned expenses
and revenues. It is a plan for saving and
spending. A budget is an important concept
in microeconomics, which uses a budget line
to illustrate the trade-offs between two or
more goods. In other terms, a budget is an
organizational plan stated in monetary
terms. In summary, the purpose of budgeting
is to:
1. Provide a forecast of revenues and
expenditures, that is, construct a model of
how our business might perform financially
if certain strategies, events and plans are
carried out.
2. Enable the actual financial operation of
the business to be measured against the
forecast.
TYPES OF BUDGET
Budget types
1. Sales budget:
The sales budget is an estimate of future
sales, often broken down into both units and
dollars. It is used to create company sales
goals.
2. Production budget:
Product oriented companies create
production budget which estimates the
number of units that must be manufactured
to meet the sales goals. The production
budget also estimates the various costs
involved with manufacturing those units,
including labor and material.
3. Cash Flow/Cash budget:
The cash flow budget is prediction of future
cash receipts and expenditures for particular
time period. It usually covers a period in the
short-term future. The cash flow budget
helps the business determine when income

will be sufficient to cover expenses and
when the company will need to seek outside
financing.
4. Marketing budget:
The marketing budget is an estimate of the
funds needed for promotion, advertising,
and public relations in order to market the
product or service.
5. Project budget:
The project budget is a prediction of the
costs associated with a particular company
project. These costs include labor, materials,
and other related expenses. The project
budget is often broken down into specific
tasks, with task budgets assigned to each.
6. Revenue budget:
The Revenue Budget consists of revenue
receipts of government and the expenditure
met from these revenues. Tax revenues are

made up of taxes and other duties that the
government levies.
7. Expenditure budget:
A budget type which include of
spending data items.
WHAT IS PERSONAL BUDGET ?

A personal budget is a finance plan that
allocates future personal income towards
expenses, savings an debt repayment. Past
spending and personal debt are considered
when creating a personal budget. There are
several methods and tools available for
creating, using and adjusting a personal
budget.
TOOLS USED FOR CREATING A

PERSONAL BUDGET
Several tools are helpful for constructing a
personal budget. Regardless of the tool used,
a budget's accuracy is only as good as the
accuracy of the updated budget data; an old
budget that does not reflect actual income or
expenses is of little use to a current budget.
Computer generated budgets have become
commonly used as they replace the need to
rewrite and recalculate the budget every
time there is a change.
Pencil and paper
A simple budget can be written on a piece
of a paper with a pencil, and optionally, a
calculator. Such budgets can be organized in
three-ring binders or a file cabinet. Simpler
still are the pre-formatted household
budgeting or bookkeeping forms that
creates a budget by filling in the blanks.
Spreadsheet software
Spreadsheet software, including Microsoft
Excel, work Numbers or
OpenOffice.org Calc, helps to arrange
budgets according to need and performs
calculations easily with rudimentary
formulas. For example, budget spreadsheets
are used to keep track of income and
expenses. The major reason most people
discontinue using budget spreadsheets that
dont offer date-shifting is that the
information needs to be reentered or moved
at the end of each month. Spreadsheets are
still excellent for complex budgets and
planning.
Money-management software
Some software is written specifically for
money management. Products such as
Fortora Fresh Finance, Money dance,
Quicken, MicrosoftMoney (discontinued),
and Gnu Cash are designed to keep track

of individual account information, such as
checking, savings or money-market
accounts. These programs can categorize
past expenses and display monthly reports
that are useful for budgeting future months.
Money-management websites
Several websites, such as Mint.com and
Thrive, have been devised to help manage
personal finances. Some may have a privacy
policy governing the use and sharing
of supplied financial information.
Spending-management software
Spending-management software is
a variation of money-management software.
Unlike typical budgeting that allocates
future personal income towards expenses,
savings and debt repayment, this type
of software utilizes a known amount of
money, the cash on hand, to give the

user information regarding what's left to
spend in the current month. This method
eliminates some of the guess work
associated with forecasting what a person
might receive for income when it comes to
allocating budgeted money. Like moneymanagement software, some spendingmanagement software packages can connect
to online bank accounts in order to retrieve a
current status report.
FOLLOWING A BUDGET
Once a budget is constructed and the proper
amounts are allocated to their proper
categories, the focus for personal budgeting
turns to following the budget. As with
allocation, there are various methods
available for following a budget.
Envelopes Envelope Accounting
or the is a method of budgeting where on a
regular basis (i.e. monthly, biweekly, etc.) a
certain amount of money is set aside for a
specific purpose, or category, in an envelope
marked for that purpose. Then anytime you
make a purchase you look in the envelope
for the type of purchase being considered to
see if there are sufficient funds to make the
purchase. If the money is there, all is well.
Otherwise, you have three options: 1) you
do not make the purchase; 2) you wait until
you can allocate more money to that

envelope; 3) you sacrifice another category
by moving money from its associated
envelope. The flipside is true as well, if you
do not spend everything in the envelope this
month then the next allocation adds to what
is already there resulting in more money for
the next month. With
envelope budgeting
, the amount of money left to spend in a
given category can be calculated at any time
by counting the money in the envelope.
Optionally, each envelope can be marked
with the amount due each month (if a bill is
known ahead of time) and the due date for
the bill.
Spreadsheet budgeting with date-shifting
Budget spreadsheets with date-shifting, like
Budget-Master.com, typically offer a
detailed view of a 12 month, income and
expense, plan. A good way to follow and

manage a budget when using a spreadsheet
that offers date-shifting is to set the current
month a few months before the current
month along the 12-month cycle.
Quinn-CO
The Quinn-CO method of budgeting is
based on a Canadian business model where
categories of expenses are set up as cost
centers. Cost centers are broken out into
three categories of spending: fixed expenses,
variable expenses and savings. Cost centre
targets are based on percentages of monthly
net revenue(household gross income minus
taxation and employee deductions). All
expenses are allocated to appropriate cost
centers based on a set of business rules
outlined in the book Wake Up or Die Poor
The ratio of fixed expenses to variable
expenses to savings make up a family's pie.
When fixed expenses make up more than

50% of a household's net revenue, That-CO
is in the "prickly" pie.
Home budget for chopras family

EXAMPLE
1. Familys Name: Chopras Family
2. No. of Family members: 6
3. No. of Earning Members of the Family: 2
4. No. of children studing: 2
5. No. of Helping Hands at home: 2(1 parttime, 1 full time)
6. No. of Telephone lines (Land lines):1
7. No. of Mobile phones: 4
8. No. of Vehicals: 2
9. (1 four wheeler; 1 two wheeler)
10. House owned
11. Designation of earning members:
Grandfather: Manager in ICICI Bank
Father: Executive director in Mehta &
Mehta
Company
FOR THE MONTH OF JANUARY

TOTAL INCOME
75000
TAXES
15000
ACTUAL INCOME
60000
HOUSE MAINTAINANCE
4000
GROCERRY+FRUITS+VEGETABLES
12000
MILK
5000
ELECTRICITY+WATER
2500
CONVEYANCE
1000
CATEGORY MONTHLY AMOUNT
CLOTHING
2500
EDUCATION+CLASSES
5000
ENTERTAINMENT+PRESETATION
2000
AUTOMOBILES
2000
TELEPHONE+MOBILE
2000
HOME HELPERS
1500
REPAIRS
500
CABLE+INTRNET CONNECTION
500
TRAVELLING
2000
LAUNDARY
500
SHOPPING
2500
STATIONERY
500
MEDICAL
5000
GRAND TOTAL
51000
SAVINGS
9000
YEARLY SAVINGS
10800
CONCLUSION
Total income for Chopra Family is

Rs.250000.thetax to be paid is the 10% of
the total income , that isRs.25000.
The actual income is (Total Income - Taxes).
The actual income is Rs.225000.
The savings after all expenditure is Rs.
45000.
The yearly savings for Chopra family is
Rs.540000.

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What are the different types of budgets discussed?

What is a personal budget and what tools can be used to create one?

CONTENTS

helps the business determine when income

met from these revenues. Tax revenues are

WHAT IS PERSONAL BUDGET ?

TOOLS USED FOR CREATING A

and Gnu Cash are designed to keep track

money, the cash on hand, to give the

you can allocate more money to that

expense, plan. A good way to follow and

When fixed expenses make up more than

Home budget for chopras family

FOR THE MONTH OF JANUARY

Total income for Chopra Family is

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