Budgets – Organization or Household
Ladies and gentlemen, today, I would like to teach you about household budgeting. Did you know that financial discipline is always a simple thing, but difficult to attain by many people? Have you ever thought that not less than 937 households file for bankruptcy each year because they can not manage their income? Well, budgeting has become an essential tool that everyone needs to embrace in the modern society.
With a well-organized budget, a household will have to enjoy a stress-free life. With a healthy budget in the household, there will be no impulse buying, no over-expenditure and no unnecessary debts. Having a monthly budget will enable a household to prioritize its expenditure, meet all its needs satisfy its financial goals and have enough money to allocate for emergencies and saving plan. Saving, for instance, is necessary for ensuring that that the future of the household and children, in particular, is safeguarded. A family that does not save is not doing justice to itself as well as its future generations.
When drafting a household budget, it s important to have in mind all the sources of income that bring money to the household. These, depending on households, may include base pay, bonuses, interest gains, overtime, gifts, incentives, tax refunds and profits. The identification of income should be the first step in the budget-preparation process because it forms the basis of the plan. Everything that follows is purely dependant on the level of income. After compiling the list of income, the expenses should approximate. The first category of expenses to consider is the mandatory ones that basically include housing, commuter, food, lease payments, car loans, property taxes, mortgage payments as well as the utility bills for electricity, gas, electricity, internet, cable TV, cell phone and landline telephone expenses.
A part from the mandatory expenses, the non-compulsory, but equally important discretionary expenses should be included in the budget. This consists of the money spent on entertainment, movies, cinema, bashes, charity donations, personal care, laundry, dry cleaning, personal hygiene, healthcare, jewelry, child care, expensive clothing and salon. Moreover, some money, preferably 10% of the household income should be preserved for emergencies. When accumulated, the emergency fund can cater for the uncertainties that might befall the household in case of job losses, the collapse of business or any form of financial crisis. After accounting for all these, the household budget should have a small provision for savings. The adoption of a saving plan is a form of paying oneself as it will help in ensuring that, at least some resources are kept aside to cater for the present and future needs.
In conclusion, I would like to let you know that financial discipline does not lie on corporate, but should start at the personal level. Each and every one of you should be challenged to ensure that you account for all your income. Whatever little money you get, you should not just spend it without knowing where it goes. Once you can star having a budgetary plan at an earlier age, you can end up becoming well-organized individuals who will not find it hard to manage resources, be it yours, your parents’ or employers’. Therefore, it should be a wake-up call to you to have a budget that clearly illustrates your income and planned expenditures.
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