Family Economics and Consumer Education

Family Economics And Consumer Education 3 (2+1)

Lesson 06 : Family Budget

Characteristics Of Good Budget

Realistic Budgets:
The financial plans or budget are usually related to a particular standard of living. But a realistic budget is the one which reduces the probability of over side of potential expenses, recognize expenditure with plans for spending and compare the proportion of expenditure with priorities in goal attainment.
Every financial plan is personal and there is no right or wrong plan. But a realistic budget should include.

1. Long range goal and possible emergencies.
2. Repayment of due bills, debts and notes.
3. Commitments both regular (as mortgage payment) and irregular (such as taxes)
4. Miscellaneous, over looked items, unexpected expenses and extra spending.
5. Current living expenses such as food, clothing, allowance and transportation.
6. Satisfaction of near future goals.

The budget should be flexible and workable.
Flexibility:
If the budget is inflexible, it will not be functional. A flexible budget lists the family’s normal fluctuating expenditures by heading such as clothing, gifts, home repairs etc,. Assign an estimated percentage of incomes for each category.
A flexible budget will also allow for impulsive buying within a prescribed limit most people enjoy emotional spending and these are planned in attainment. Flexibility in budget is increased when a range of expenditure is estimated for certain items that normally have fluctuating pattern.
Workability:
For a budget to be workable, it must include same practical methods to achieve the goals that have been identified for its time period.
A workable budget is complete, when it does not omit items that are normal for spending pattern of the group. Incidents such as stationeries, postage, cosmetics, car repairs, recreations, gifts are some of items forgotten some times.
If such items are considered as miscellaneous expenditure in budget, this category must be adequate enough to include them.

Gaining maximum satisfaction from the budget requires accurate estimates of the cost of living. If the income pattern is irregular and income is lower than the anticipated amounts the flexible side of the budget must be trimmed or saving is helpful to establish accurate estimates of flexible expenditures.