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Lesson 4: Family Budget: Its Advantages A

An effective family budget provides control over finances rather than relying on luck. Developing a budget involves taking stock of current spending, determining necessities from luxuries, and finding areas to cut expenses. Following a budget brings peace of mind through financial stability and control over expenditures. Creating a budget is a family effort that requires commitment from all members. It involves identifying income sources, listing expenses, and developing savings goals in order to balance income and spending. Keeping accurate budget records in one central location helps manage family finances.

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Alex Olesco
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331 views

Lesson 4: Family Budget: Its Advantages A

An effective family budget provides control over finances rather than relying on luck. Developing a budget involves taking stock of current spending, determining necessities from luxuries, and finding areas to cut expenses. Following a budget brings peace of mind through financial stability and control over expenditures. Creating a budget is a family effort that requires commitment from all members. It involves identifying income sources, listing expenses, and developing savings goals in order to balance income and spending. Keeping accurate budget records in one central location helps manage family finances.

Uploaded by

Alex Olesco
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Lesson 4

PREPARING PERSONAL AND FAMILY BUDGET

Many families are worried about the family budget they think that it is too restrictive
and limiting they also feel they do not have enough spending freedom and that is taking away
some of the pleasures that they should be enjoying in life. In reality, an effective budget puts
the family in control of its finances, instead of just depending on sheer luck.

You can have more money for the things you want by taking the family's picture of
current financial situation, this well determine where the funds are going now and it well help
in developing plants for reducing expenditures. Make the list of all the things you spend on for a
month. Then, with all concerned family members, determine which budget items are
necessities, which are "luxuries" (and perhaps expendable) and where you can cut expenses or
even eliminate.

FAMILY BUDGET: ITS ADVANTAGES

A good budget, when it is followed, gives peace of mind and financial stability, studies have
shown that one of the main reasons for family conflicts is money management. A well-
stablished money management reduce stress. Following a budget takes discipline but is worth
the effort.

A family can always spend as much as it earns, peace of mind comes from being able to
control family expenditures. Every family member should strive to live within what they can
actually afford. Having a standard of living that allows for some savings bring much more
content and security.

DEVELOPING A FAMILY BUDGET


There are many different ways of developing a budget that will work for family. It takes
effort to make a family budget but it needs discipline to make it work if your budget is a family
affair, it will need the commitment of each member involved or it will fail. Each one should
commit himself or herself to the success of the budget decided upon your budget will have to
be re-evaluated to make sure that it is work. Any change in the family such as income, size,
ages, and needs will have an equivalent adjustment in your budget.

In planning a budget, it is necessary to see just how much money is coming in. If the family
income is stable, a budget maybe used for a long period of time than a income that is not
steady. For example, occupations such as a salesmanship may not, know how much he or she
will be receiving the future and will need to budget monthly. For a family with a steady income
list all possible source of income and establish an amount.

The family can make a weekly, monthly or yearly budget the most common budget if ever,
is monthly.

1. Know how much income the family receive, income refers to the total amount the family
receives from salaries and other sources. What is important to the family in terms spending, ask
everyone to give inputs think what the family wants to do now and in the future reflect on what
has to be done in order to decide together what your short and long goals are.

2. Find out how much money the family is spending

If the family has not been using any type of budget, establish first your expenditures for at least
a month. Make a chart with basic headings such as food, clothing, housing, health, education,
contributions, cleaning, help, gifs, insurance, savings, taxes, dues, and debts.

3. Now that you have an idea how much money coming in, makes a list of your needs and
wants and how much money you are spending. These would include items life your house
payment, utilities, phone and insurance. If you have found that you are spending more than you
are making you will need to find areas to cut down. These are areas can include food, gifts and
recreation. If you find that you are living well within your means, it is time to looking at your list
and decide which desires can be included in your budget.

Saving is a must. If you are financially strapped and cannot see where you could possibly
save money, begin by saving all of your loose charge.

The family should not get into debt for wants, needs such as a home and education may
require the family to get a loan but thus should be a last option. Interest escalates and can
overtake your life. Family members should learn to live within their means.

CREATING A FAMILY SPENDING PLAN


Below are six easy steps to make a family spending plan.
Your family can adopt it or modify to suit your specific needs.

1. Identifying Goals – Identify your short-term goals (less than 1 year). Intermediate goals
(1 to 5 years) and long-term goals (more than 5 years).

2. Setting goals – During this stage of the budgeting process, you will prioritize your goals,
which one of your goals is the most important to you?

3. Recording Income – It involves knowing how much income you have.


4. Determining Expenses – It involves recording periodic expenses in an expense chart. A
budget must take into account monthly, periodic and annual costs. Make sure that your
monthly budget has room for these expenses.

5. Developing Your Savings Plan – The outcome of step 5 is to have income expenses +
savings. If income does not equal expenses plus savings, consider some changes, you
can try to decrease some monthly expenses that every each month (example; food,
clothing, entertainment) adjustments should be realistic to avoid more problems.

6. Using the Plan – This is the final step of developing a spending / savings plan. Keep
saving your receipts and keep on top of saving the money you need to reach your goals.
Save the monthly amount needed for your periodic expenses so that when it is time to
pay them, the money will be available. If you find that you are overspending it might
mean that your plan does not fit for your values. If you continually spend more than you
plan, re-examine your spending habits.

Choose one place to keep your records the family finance center may be as elaborate as
a home office or as simple as a carboard box under the bed or a file cabinet in the family
room. The important thing is you find a place where all the papers you need to manage
finances can be stored.
EFFECTIVE USE OF THE TIME AND ENERGY
One of the most challenging aspects of home management is the wise utilization of limited
resources.

Families are constantly faced with decisions on how to allocate limited resources.

1. How much time does one need to complete a task?


2. How much money should a family spend for a weekend vacation?

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