Planning and Preparing a Budget

Planning and Preparing a Budget

1. Planning and Preparing a Budget

2. A budget is a plan of how the family income should be spent. It is easier to control spending if you have a budget. Planning and preparing a budget are the essential ingredients in good money management. Experts in economics have formulated the steps in preparing a budget.

3. The Family Budget A family budget is much like a student budget. Families, like students, will manage their money better if they prepare a budget. The family budget reflects the priorities of needs and wants of a particular family.

4. The major difference between a family budget and a student budget is that a family will have certain fixed expenses that it must meet.

5. Examples of these fixed expenses that must be paid are the following: mortgage or rent payments for a home or a car; life insurance and local taxes, if any; bills for utilities such as electricity, gas, water, and phone; and loan payments of some home furnishings bought in installment, if any.

6. Steps in Planning a Budget Here are the steps to plan your family’s budget: Prepare a checklist of your needs, wants, and goals. Estimate your cash income for a certain period of time (week, month, year). Estimate your expenses for period ending. It can be your total expenses for a week, a month, or a year. Set up a budget.

7. Here is a sample budget: The Typical Filipino Family Budget from a Monthly Income of Php 20, 000.00 Particulars Expenses Php Percentage Food and beverage 7,700 38.5 Children’s education 2, 200 11 Transportation 2, 000 10 House/utilities 2,100 10.5 Health/medical services 1,600 8 Bank savings 1,200 6 Communication 1,200 6 Clothing/apparel 1,000 5 Miscellaneous 1,000 5 Total 20,000 100%

8. Household Budget of A Filipino Family

9. A Student’s Budget As earlier mentioned, a student like you should also have a budget to work on. A typical student’s spending includes the following; food - money you spent on what you eat during recess or lunch in school t ransportation - fares for MRT, LRT, tricycles, or jeepneys , among others s avings - money saved from allowance c lothing and accessories (wants) e ntertainment - movies, magazines, batteries, cellular phones loads, among others.

10. A Student’s Weekly Budget Week Budget 1-7 December 2018 Income Php Planned Php Expenses Actual Expense Allowance for a week (at Php100 per day) 700 Fixed Expenses: Food 245 Transport 140 Wants: Clothing 70 Entertainment 70 Savings 175 TOTAL Php700 TOTAL Php700 Step 1 List amount of income or cash received as allowance. Step 2 List planned expenses on needs and wants. Step 4 Add up your income, planned expenses, and actual expenses. Step 3 List your savings. Step 4 Check if the total income is equal to planned expenses.

11. End of the Slide!