Family Economics And Consumer Education 3 (2+1)

Lesson 01 : Meaning and Scope of Family Finance Management

Importance of family finance

Family finance facilitates and motivates all economic activities relating to consumption, production, exchange and distribution. It enables the person to maximize his satisfaction. It measures the intensity of desire and the utility of a commodity to the family. It facilitates production by stimulating saving and investment by family members. It is an asset to harness various factors of production so that the family is able to maximize its profit. Introduction of finances facilitates exchange and helps in development of standard of family living. Family finance functions as a common denominator for the distribution of social products. It helps in allocation of various resources among competing uses. It is an extremely valuable social instrument which largely contributes to the growth of family wealth and welfare. It ensures the smooth functioning of family’s economic system. Family finance is a powerful and crucial instrument for capital formation and economic development of the family.