Name: Princess Eunnah O.

Dayday

BSED TLE
HOME MANAGEMENT

BUDGET
Lesson 1: Title

2. ACTIVITY

Supply what is being asked below.

 Budget

Definition: Budget is to plan, organize, track, and improve your financial situation. In other
words, from controlling your spending to consistently saving and investing a portion of your
income, a budget helps you stay on course in pursuit of your long-term financial goals.
Budgeting is hard work.

Importance: A budget is essential to managing your money. That's because a budget helps
you spend your money wisely on the things you must have , these are your needs. Save money
for the things you like but can live without , these are your wants.

Types of Family Budget:

Budget can be of three types:

A. Deficit budget:

When the expenditure exceeds income, it is known as deficit budget. It is not at all desirable.

B. Surplus budget:

In this budget, the income is more than the expenditure. The family is able to save more in this
budget.

C. Balanced budget:

This is a good budget. In this budget, income and expenditure are equal and the estimated
income meets the estimated expenditure.
Steps In Budgeting:

Step 1: Set Realistic Goals

Goals for your money will help you make smart spending choices. Ask yourself: What do I want
my finances to look like in one year? Decide what’s important to you and start there. More
about this

Step 2: Identify your Income and Expenses

You probably know how much you earn each month – but do you also know where it all goes?
Find out by tracking what you’re spending. Spend as you normally would, but for a few weeks,
jot down every cent you spend. It’s easy and you might be amazed by what you find out.

Step 3: Separate Needs and Wants

Ask yourself: Do I want this or do I need it? Will spending this money get me closer to my
financial goals or further away? Can I live without it? Set clear priorities for yourself and the
decisions become easier to make.

Step 4: Design Your Budget

Make sure that you are not spending more than you make. Balance your budget to
accommodate everything you need to pay for. One easy way to do this is with our free, easy-to-
use budget calculator spreadsheet and worksheet that's built for Canadians. Learn more about
crafting a budget

Step 5: Put Your Plan into Action

Match your spending to when you receive your income. Decide ahead of time what you’ll use
each pay cheque for. Ask yourself: Have I allocated money for my necessities (housing, food,
utilities, transportation, etc.)? Have I put money aside for my debt payments, unexpected
expenses, savings and the fun stuff? This will protect you from going into debt further because
you won’t rely on credit to pay for your living expenses.

Step 6: Seasonal Expenses

You know that things will “just come up” – school expenses, new shoes or an annual
membership. Set money aside to pay for these expenses so you can afford them without going
into debt. More on this

Step 7: Look Ahead

Getting on track with a budget can take a month or two. You’ve lived all this time without a
spending plan, so give yourself time to adjust. Don’t be afraid to ask for help if things aren’t
falling into place – help is just a phone call away.
Characteristics of a good budget

1. Has been measured against actual spending activities for a period of time
(tracking)

2. Is realistic for your situation

3. Allows for savings, especially for emergencies

4. Helps you work toward stated goals

5. Has “rewards” built into so that you aren’t depriving yourself

6. Lets you adjust on-the-fly if circumstances change or initial projections aren’t

accurate

7. Doesn’t include overtime or bonuses as a part of guaranteed income

8. Reflects empowering choices

9. Has input from everyone whose life will be impacted by the budget

10. Is as thorough as possible

Misconceptions

The following are common misconceptions/ myths about budgeting which may hold you
back.

1. Budgeting is strict: Budgeting is not strict. When drawing up a good budget,

always make sure the budget is realistic. You can also draw a flexible budget where

you can focus on cutting back one area at a time rather than everything at once.

When your budget is realistic, it gives you more drive to stick with it and achieve

your goal.

2. Budgeting is time consuming and too much work: Budgeting in today’s

millennium is not time consuming with the help for different applications (Paid and

open source) to automate everything. Most financial applications that allows you link
 your financial account and have all your spending pulled in automatically also allows

you to set up budgets.

With the use of these apps, your budget will be easier to prepare and updated. No

stress, no fuse.

3. Budgeting is not for me because: So, there are various misconceptions of

people thinking that budgeting is not for them.

I am too rich: The higher your wealth, the higher possibility of wasting it. In fact, the

more money you have, the more attention its management deserves.

I am too broke: Some people assumes budgeting is for wealthy guys. if you don’t

have much money to begin with, budgeting is crucial. A budget will help you identify

opportunities to save or earn more.

Guys, even if you are as wealthy as Bill gates or as broke as that random guy on the

street, trust me budgeting is for everyone.

4. Budgeting leads to giving up on stuffs: Before I started drawing up personal

budgets back then in the university, I believed this misconception and no one was

going to change my mind. But then I started making budgets for myself and I

realized that living on a budget does not mean I’m sentenced to a dreadful, self-

denying life (void of any fun or joy).

I am in control, and I get to decide what goes into my budget. I can decide to add

clubbing, shopping, weekend getaway to my budget. All I need to do, is make sure I

don’t overspend.

5. Budgets have to be very detailed: Everyone’s budget is different. You can

design your budget whichever way you like. It is not compulsory that because Mr A’s

budget is well detailed, yours don’t have to be like that also.

So guys, just the way I gave budgeting a try you can also do that today. Have any of

these budgeting misconceptions kept you from proper financial planning? Pay no

attention to them and give budgeting a try and trust me , You will thank me later.

Problems and factors affecting the budget

Income
Definition
Characteristics
Types
Planning and methods of handling