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The Importance of a Family Budget

Updated on October 26, 2009

The Importance of a Family Budget

An operational budget is a plan on how family income should be spent to provide for family needs without incurring debts or deficits. It is the parent's primary task to prepare a family budget. However, every member must also know how the family income is budgeted. Through budgeting, family members learn to spend money wisely, thus, saving money which could be used for other family needs. Resources such as time, energy, and utilities are also used well when income is budgeted.

In budgeting one must consider the size of the family, its income, the needs of the family and the locality where the family lives. For a budget to be workable, income should be adequate enough to meet the prioritized needs of the family.

1.              Food — In the situation where there is a baby in the family or there are members with special conditions who need a special diet, there's also a need for additional money to be spent for food.

2.      Shelter — Does the family own the place where they live or is it only leased? This is important to know because expenses for house repair must be part of the monthly budget. If the family owns the property, then payment for the real estate tax and fire insurance should be set aside yearly.

3.      Clothing — Every family member has different clothing needs. His/Her activities and family status in the family must be considered.

4.   Education — Tuition fees and school needs such as books and other supplies constitute expenses that must be provided for, especially the daily school allowances.

5.   Household Operations — If the family has helpers, provisions for their salaries should be a part of the monthly budget.

6.   Utilities such as water, electric and telephone services which are paid monthly.

7.   Medical and Dental Care — Expenses for healthcare of the family must be provided. Medicines properly prescribed must be always available at home for ready use when needed.

8.   Rest and Recreation — The family needs rest and recreation after work and study.

9.   Savings — The money saved can be used in emergency situations. It can grow also in the form of investment.

Pointers to keep in mind when making family budget.

1.   Know your income - a clear idea of just how much can be provided for family needs.

2.   Determine which expenses are fixed and which are flexible by making a list of monthly needs.

3.   Base the budget on a system of priorities.

4.   Have a record of expenses.

5.   Make allowances for savings.

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    • profile image

      renz 

      6 years ago

      maybe this will up to the salary paid by their boss/company.

    working

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