Scribd Logo
Upload

Welcome to Scribd!

  • 14K views

    Family Budget

    Uploaded by

    Yatharth Kohli
    A family budget outlines a family's planned spending for various necessities, comforts, and luxuries based on their income. It shows how income will be distributed across expenditure items. Creating a budget has advantages like avoiding conflicts over finances, identifying unnecessary costs, and helping achieve financial goals. The process of making a budget involves noting income, tracking spending, setting goals, and creating a plan to allocate income across expenses each month. Budgeting is beneficial as it promotes proper financial planning and conscious decision making for families.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Family Budget

    Uploaded by

    Yatharth Kohli
    14K views6 pages
    A family budget outlines a family's planned spending for various necessities, comforts, and luxuries based on their income. It shows how income will be distributed across expenditure items. Creating a budget has advantages like avoiding conflicts over finances, identifying unnecessary costs, and helping achieve financial goals. The process of making a budget involves noting income, tracking spending, setting goals, and creating a plan to allocate income across expenses each month. Budgeting is beneficial as it promotes proper financial planning and conscious decision making for families.

    Original Title

    Family budget.docx

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Read this document in other languages

    Did you find this document useful?

    Is this content inappropriate?

    A family budget outlines a family's planned spending for various necessities, comforts, and luxuries based on their income. It shows how income will be distributed across expenditure items. Creating a budget has advantages like avoiding conflicts over finances, identifying unnecessary costs, and helping achieve financial goals. The process of making a budget involves noting income, tracking spending, setting goals, and creating a plan to allocate income across expenses each month. Budgeting is beneficial as it promotes proper financial planning and conscious decision making for families.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    14K views6 pages

    Family Budget

    Uploaded by

    Yatharth Kohli
    A family budget outlines a family's planned spending for various necessities, comforts, and luxuries based on their income. It shows how income will be distributed across expenditure items. Creating a budget has advantages like avoiding conflicts over finances, identifying unnecessary costs, and helping achieve financial goals. The process of making a budget involves noting income, tracking spending, setting goals, and creating a plan to allocate income across expenses each month. Budgeting is beneficial as it promotes proper financial planning and conscious decision making for families.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 6

    Family budget

    INTRODUCTION:- A budget is a financial plan for a


    defined period, often one year. It may also include
    planned sales volumes and revenues, resource
    quantities, costs and expenses, assets, liabilities and cash
    flows. Companies, governments, families and other
    organizations use it to express strategic plans of activities
    or events in measurable terms

    A family budget is a statement which shows how family


    income is spent on various items of expenditure on
    necessaries, comforts, luxuries, and other cultural wants.

    It shows the distribution of the family income over the


    various items of expenditure.

    CHARACTERISITCS OF A FAMILY BUDGET


    The basic characteristics of a family budget are as follow:-

    1. Has been measured against actual spending activities for a period of


    time (tracking)
    2. Is realistic for your situation
    3. Allows for savings, especially for emergencies
    4. Helps you work toward stated goals
    5. Has “rewards” built into so that you aren’t depriving yourself
    6. Lets you adjust on-the-fly if circumstances change or initial projections
    aren’t accurate
    7. Doesn’t include overtime or bonuses as a part of guaranteed income
    8. Reflects empowering choices
    9. Has input from everyone whose life will be impacted by the budget
    10. Is as thorough as possible

    FUNCTIONS OF BUDGET
    Avoid Family Conflict
    Finances are a common source of conflict between couples, often because their spending styles
    differ or they're at odds over managing debt. Creating a budget starts you on the same page by
    giving you an objective view of how much money is coming in and how much is going out.
    Knowing where you stand is the first step toward reaching an agreement about how to
    manage your finances with the resources at hand.

    Identify Unnecessary Costs


    Knowing exactly where your money is going helps you identify opportunities to reign in
    costs. It's not just about the price of coffeehouse coffee, lunches out and too-frequent shopping
    sprees. A family budget is particularly helpful in uncovering more insidious waste, such as a
    cable TV package you rarely watch or a landline phone no one uses.

    Reach Financial Goals


    It takes careful planning to achieve financial goals. Your family budget can get you there faster
    by helping you see your current situation in a new context. For example, your goal may be to
    eliminate credit card debt by a certain date. Success likely depends on you figuring out how
    much you need to pay each month, then reprioritizing spending to free up the extra
    money.
    Longer-term goals, such as target retirement savings, may depend even more on a budget. It's
    easy to put off saving for an event that's years away, but each delay puts the goal a little further
    out of reach.

    ADVANTAGES OF A FAMILY BUDGET:-

    . Budgeting helps in the proper distribution of family income for satisfactory


    living.

    2. It is a valuable means of comparing various items.


    3. Budgeting facilitates adjusting irregular income to regular expenditure.

    4. It helps to live within one’s own income.

    5. By budget we can identify the unnecessary and extravagant expenditure.

    6. A budget determines how a family can use all its resources

    7. Budget can help to save for future.

    8. It can help in development of goods buymanship.


    9. Budget keeps one free from financial worries and anxieties.

    10. It encourages conscious decision making.

    DEMERITS OF A FAMILY BUDGET:-

    1. Budget becomes a failure in case of irregular income.

    2. The illiterate people are unable to know the techniques of budget as it is a


    written plan.

    3. Extra expenditure cannot be met easily when a family makes a budget.


    Sometimes saving becomes lower.

    4. If the members of the family do not co-operate with the home maker, the
    budget is becoming a failure.

    5. The housewife becomes tensed when her plan of budget cannot work
    properly.

    Types of Family Budget:


    Budget can be of three types:
    A. Deficit budget:
    When the expenditure exceeds income, it is known as deficit budget. It is not at
    all desirable.

    B. Surplus budget:
    In this budget, the income is more than the expenditure. The family is able to
    save more in this budget.

    C. Balanced budget:
    This is a good budget. In this budget, income and expenditure are equal and
    the estimated income meets the estimated expenditure.

    PROCESS OF MAKING A FAMILY BUDGET:-


    Step 1: Note your net income

    The first step in creating a budget is to identify the amount of money you have
    coming in. Keep in mind, however, that it’s easy to overestimate what you can afford
    if you think of your total salary as what you have to spend. Remember to subtract
    your deductions, such as for Social Security, taxes, 401(k) and flexible spending
    account allocations,

    Step 2: Track your spending

    It’s helpful to keep track of and categorize your spending so you know where you
    can make adjustments. Doing so will help you identify what you are spending the
    most money on and where it might be easiest to cut back.

    Step 3: Set your goals

    Before you start sifting through the information you’ve tracked, make a list of all the
    financial goals you want to accomplish in the short-and long-term. Short-term goals
    should take no longer than a year to achieve. Long-term goals, such as saving for
    retirement or your child’s education, may take years to reach. Remember, your
    goals don’t have to be set in stone, but identifying your priorities before you start
    planning a budget will help.
    Step 4: Make a plan

    Use the variable and fixed expenses you compiled to help you get a sense of what
    you’ll spend in the coming months. With your fixed expenses, you can predict fairly
    accurately how much you’ll have to budget for. Use your past spending habits as a
    guide when trying to predict your variable expenses

    The following is a typical family budget of a person with a monthly


    income of Rs. 900.

    Item Expenditure Rs. Percentage

    Food 540.00 60%

    Fuel 54.00 6%

    Clothing 90.00 10%

    House Rent 72.00 8%

    Lighting 18.00 2%

    Children’s 36.00 4%
    Education

    Medical Aid 9.00 1.0%

    Travelling 9.00 1.0%

    Religious and 18.00 2%


    Social Ceremonies

    Entertainment and 18.00 2%


    Luxuries

    Miscellaneous 36.00 4%
    Total Rs. 900.00 100%

    This is the family budget of our imaginary consumer family.

    SO AS WE SAW HOW BUDGETING IS BENEFICIAL FOR US


    EVERYONE SHOULD OPT THIS PROCESS AND APPLY IT IN
    THEIRDAILY LIVES.THROUGH THIS PROCESS WE CAN
    EASILY DIFFERENTIATE OUR RECEIPT AND OUR PAYMENT
    OF A PARTICULAR PERIOD OF TIME AND THAN CAN DO
    FURTHER ANALYSIS OF DATA AND INVESTMENTS
    REQUIRED,THIS ENABLES APERSON TO HAVE PROPER
    PLANNING OF THE INCOME AND THE EXPENDITURE

    You might also like