Management of Income

If you were given extra money. How would you spend it?

Like any group or organization, the family needs money to sustain its growth and to achieve its goal.

Hence, the family strives to raise money through various means.

Income is the money that flows into the family to be used in exchange for goods, services, or energy.

Where does the income of the family come from?

You may ask your parents about your family’s source of income. They can be derived from:

1.       Salary earned for services rendered.

2.       Commission, bonuses

3.       Business profits, sales, or lease of property

Expenses are items you use and have to pay for. Expenses may be basic commodities, services, and materials.

Kinds of Expenses

1.        Fixed expenses are those that are regular and predictable, for example, house rent, electric and water bills, food, transportation, and school allowance.
2.        Variable expenses come at irregular time, for example, hospitalization, charity contributions, and family treats.

A Budget is a plan of how one will allocate or distribute the family income or available money.

How Important is Budget?

Budget is important because it allows you to allocate money based on well planned needs. Budget likewise shows where the money was spent.

How do You Prepare a Budget?

Starting with your personal budget, do these:

1.        Know the exact amount of money you expect to allocate (this is your allowance).
2.        List your expenses.
3.        Classify your expenses into fixed and variable expenses.
4.         Rank your variable expenses according to the most important to the least important.

Family Budget

Your family can also prepare a budget similar to your personal budget. What are the expenses to consider in a family budget? Read the list below?

1. Food usually gets the larger share.
2. Shelter comes if you are renting, if not, includes taxes, repair and maintenance under this item.
3. Educational expenses include fees, allowances, and supplies.
4. Clothing depends on the needs of the members and the number of the members in the family.
5. Utility includes electric and water bills.
6. Medical and Dental Care are often needed.
7. Recreation enables the family to enjoy weekends.
8. Savings is needed for future trips and emergencies.

“Remember: Income – Expenses = Savings”