Since an Interim Budget of our country is due today i.e.17th February,2014, we will be watching and even discussing lot on country’s budget and it’s
pros and cons and what should have been done and what should not have been done
and the cause and effect of the same.
While worldwide all country’s prepare and present budget,
but it has been found that only very few percentage of household family’s do Budgeting. While we all live on, have our own set of income, expenses
and responsibilities, it is fatal not to prepare a budget (in Writing, incomes
, expenses on paper). In India the percentage of household family actually
writing income and expenses on paper is still very low. Some Family member may be writing their daily expenses in a book, but for me that is very little work done.
Having a family can be a huge responsibility. There are
countless things that must be taken care of everyday and the safety and
security of said family is foremost in the mind. That is why it is so important
for a personal family budget to be in place. The financial area of your life as
it pertains to the family is the deciding point between happiness and extreme
stress. Those who fail to use a family budgeting system often end up with family problems
and worse yet, devastating financial losses, all of which could have been
prevented with a bit of planning.
The family budget is really nothing more than a listing
of the expenses and incoming monies on month to month basis. While some people
believe that the budget must be a complicated mess of numbers and accounting
practices, the common person will find that simplicity is the best method. So the
first rule of the family budget should most certainly be to keep it simple.
Budgets carry the stigma of
cutbacks and no spending on fun items. A family budget serves as a useful tool
for families, regardless of income level. A budget may actually free money and
assist in targeting the money on more useful items. Budgeting is an
important component of financial success and one that's not difficult to
implement.
Following are top 6 Reasons why a family should sit together and discuss,prepare budget and reassess the same at regular intervals-
1.Track Spending
A family budget allows the analysis of the
family's money and how it is spent. The exercise of identifying spending habits
reveals trends and money wasters. Small amounts of money add up
quickly, creating a drain on the bank account if the items purchased are not
necessities. Identifying the items on which money is spent is a key when
establishing a family budget. Families often find themselves surprised when
they explore where the money goes each month and from my short but great
financial planning experience I can vouch that putting things on paper makes a
huge difference, especially sitting together with all family members. One can
even allot Percentages to each expense, to ascertain what percentage of total
expenses goes where.
2 Predict Spending
A family budget provides a tool to predict
future spending. Foreshadowing expenses and spending trends allows the family
to plan for upcoming events or unexpected expenses that inevitably arise. A
review of the budget periodically allows the family to adjust spending based on
previous months. The budget also allows the family to identify areas that can
be cut when unexpected expenses do arise.
Also some expenses are done on monthly basis, some
on bi-monthly basis, some quarterly basis ….and so putting on paper helps a lot
to track and predict what comes next. And on the top of it, if followed rigorously
even for some time by family, there would be no reminder needed for any of the
future expense.
3.Manage Debt
Consumer
debt hampers many families, holding them back from financial freedom. A family
budget helps control spending which allows extra money to go toward paying off
debt. Setting budget ensures that all credit cards and other forms of debt
are paid on time each month,avoiding late fees and penalties. Extra money in
the budget may also be set aside to aggressively pay off outstanding debt. This
eventually frees more money to apply toward other areas of the budget,
including a family savings account.
4. Increase Savings
The savings account often falls neglected
without a family budget. Small splurges eat away at any extra money in the bank
account which could go towards savings. A family budget allows a percentage of
the income to go toward a savings account or other investment options. Building
the savings into the budget ensures the money makes it into the savings account
before it is spent on other things, it also throws up actual surpluses left on
each regular interval, which helps for either future expense or saving.
5. Teach Financial
Responsibility
Implementing a family budget sets a strong
example for children. Financial responsibility begins at an early age, well
before a child is old enough for a check book or a credit card. The responsible
approach of creating a budget instills the value of money and responsible
spending in the entire family. While they don't need to know every detail of
the family's financial situation, understanding that spending money needs to be
planned is a good lesson for kids to learn.
6.
Creates a Common Vision
for Family
Doing this activity on regular basis has its
indirect advantages for the family. It creates a sample vision for the family
and each member keeps tracking it somewhere, and on a regular basis the family
sits together. GREATEST ADVANTAGE…..
So traditionally it is
said.
“Family that eats
together, stays together”
AND
The improved latest
version says,
“Family that discusses and
prepares budget together, stays and grows together”
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