Steps in preparing a family budget

There are different types of budget - which is basically the wise plan regarding money spending - severally we heard about the "state budget" which is the money that a country invest in paying civil servants salaries and doctors as well. Here are some rules that help in preparing a family budget.

Preparation of a budget includes the following steps:
1. List all the goods and services needed by the family throughout the proposed budget period.
This will include food, clothes, school fees, electricity bill, insurance, etc.

2. Place them in order of priority or importance to the family.
For instance, food, clothing and housing expenses would be higher in order of priority than insurance, savings, etc.

3. Make an estimate of the cost of each need.

4. Estimate the total expected income for the planned period.

5. Bring expected income and expenditure into balance. Expenditure should not be more than income.

6. Review the budget to ensure that it is likely to work.

Example of a budget for the family
It is important to have at least an example of a budget for an imaginary family of three persons that has a monthly income of one 1,000 euros.

Needs Income budgeted Amount
Food. 30%. €300
Rent. 23%. €230
Clothing. 10%. €100
Health. 10%. €100
Transport. 6%. €60
Education. 13%. €130
Personal allowance. 3%. €30
Savings&insurance. 3%. €30
Entertainment 2%. €20

This is a budget for an imaginary family. Each family should develop their own budget. No two families are the same. Therefore no two families' budgets can be the same considering the factors that regularly influence each family's budget.

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