After earning money, a family spends it on their various needs, basic necessities such as food, clothing and shelter. After their needs are fulfilled, the family desires to have comforts and luxuries, which makes the family members more comfortable. All these expenses are referred to as expenditure. Expenditure provides the satis-faction of life for the members of the family.
Factors Affecting Expenditure of a family:
1. Income:
In low-income groups, a major part of income is spent on food whereas in high income groups only 50percent of their money is spent on food.
2. Family size:
Family size also plays a major role in expenses made. Expenses on food, clothing, and education is more in larger families as compared to small sized families.
3. Family composition:
In the expanding stage of the family more money is spent on education and clothes while in the contracting stage, more expenses are incurred on medicines. The majority age group of people in a family also decides the expenditure of a family.
4. Family status:
Influenced by the social circles they move in, a considerable amount of cash may be spent by some families on, maintaining a number of cars, designer clothes, entertainment, luxury items, etc.,
5. Type of family:
In a joint family, money is saved on rent and childcare. Whereas in small or nuclear family there is more expenditure incurred.
6. Family values:
Some people give more value to education and prefer spending more on books. Those giving more importance to religion spend more on religious activities.
7. Location:
There is less expense in small towns as compared to that in cities. If the school or office is nearby, less money is spent on transport. The location and lifestyle also determines the expenses of a family.
8. Skill, knowledge and an interest to save:
A homemaker with her knowledge, skill and interest in culinary arts can prepare exotic dishes at home and thus reduce her expenditure. Nowadays people are becoming more lazy and want to do all their by online. The food, groceries, medicines, purchase of books, things, electronics, etc,. are done in online marketing.
9. Access to community facilities:
Community facilities help save expenses. A person using a library need not spend money on buying books.To control family expenses one has to know about making budgets. Budgets help to reduce our expenses and also we can know about the types of expenses made by us for a particular period of time.
Let us discuss about the Budgeting
The common planning device for the use of money is the budget. It is a care-fully prepared spending plan based on the actual family income. It is a plan based on previous experience, present needs and future expectations. A budget is always prepared for a fixed period of time gen-erally for a month. Budget is a guide to realistic spending aimed at avoiding over expenditure.
What are needs of budgeting in a family
• Budget acts as an intelligent guide to spending.
• It enables a family to have an overall view of their income.
• Budgeting facilitates adjusting irregular income to regular expenditure.
• Budgeting helps people to discuss their needs and set their own priorities on them.
• It helps one to cut unnecessary expenditure.
• It helps one to be free from debts.
• It helps one to live within one’s income.
• It encourages conscious decision making which may help in including long term goals in the budget.
• It relieves the family members from worries of future.
• It forces one to decide what one wants most out of life.
• It provides for future saving.
Its success depends upon its being simple, realistic, flexible and suited to the family or individual for whom it is made.
What are the items to be considered while budgeting:
It is necessary to list the chief budget items to make sure that each item is attended to in the expenditure plan while portioning the income. Each family may have their own way of listing the items.
The chief budget items include:
i. Food
ii. Clothing
iii. Housing
iv. Education
v. Transport
vi. Personal Expenses (Sundries)
vii. Household Expenses
viii. Savings
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