HOMESCIENCE- BUDGETING

Importance(objectives) of budgeting:
-acts as an intelligent guide to spendingas
-helps you steer clear of debt
-enable families to have an overall view of their income
-ensures that your spending is not greater than your income
-allows you to regulate your funds rather than your money regulating you
-helps one to live within one's mean

Types of famliy buget:

1)Surplus budget
income is more than expenditure

2)Balanced budget
icome and expenditure are almost the same

3)Deficit budget
expenditure exceeds the income

Factors affecting family budget:

i) Composition of family
-number of members in the family, along with the earning members

ii) Family life cyle

-the familys present stage that is whether it is a beginning, expanding or
contracting family

iii) Socio-economic status

-as one earns more money, their standard of living increases

5 steps for planning a budget:

i) list the commodities and services required by the family members throughout the
proposed budget period
ii) estimate cost of desired expense
iii) estimate total expected income
iv) bring expected income and expeniture into balance
v) check plans to see that they have reasonable chance of success and possibilities
of saving for the future

ASSURED INCOME:
-this is the salary, wages, etc that a person gets
-necessities are taken cared of by assured income

POSSIBLE INCOME:
-this includes bonuses, gifts and other earnings
-it should be used for desired expenditure

Saving can be defined as the abstinence from present consumption for future
consumption

INCOME - SAVING = EXPENDITURE

Importance(objectives) of saving:
-helps in period of physical inability or during illness
-helps to live debt free
-becomes a source of income
-useful in making big purchases like house, car, etc
-helps to maintain good standard of living
Investment is the process of putting surplus funds in some productive activity with
the expectaion of reasonable return and the assurance of the capital remaining
intact

COMPULSORY SAVINGS:
-provident fund (PF)
-pension scheme
-gratitary
-compulsory deposit schemes for tax payer

VOLUNTARY SAVINGS:
-banks
-post office
-life insurance scheme
-public provident funds(PPF)
-unit trust fo india

BANKS
institution which accepts deposits from public and in turn advances loans by
creating credit
services--
i) fixed deposit account
ii) PPF account
iii) recurring deposit account
iv) saving bank account
v) janta saving account

POST OFFICE
oldest saving institutions in the country
schemes--
i) recurring deposit scheme
ii) monthly income scheme(MIS)
iii) PPF
iv) fixed deposit
v) kisan vikas patra(KVP)
vi) saving accouts
vii) national saving certificates(NSC)

LIFE INSURANCE SCHEMES

LIC-life insurance corporation
policies--
i) term insurance
ii) whole life insurance
iii) pension plan
iv) endowment life insurance

PPF
popular long-term investement option backed by the govt of india
ivnvestors can investa min of rs 500 to max rs 150,000

UNIT TRUST OF INDIA

schemes--
i) childrens gift plan
ii) unit 64
iii) unit linked insurance plan(ULIP)