Everyone is aware why budgeting is so essential and how one should not skip it no matter what!!
So, let’s get started:
It is necessary to list the essential items to make sure that each item is attended in the expenditure plan while portioning the income. Each family may have their own way of listing the items.
The chief budget items are:
- Transport -It includes the expenses incurred on the use of public or personal transport. This would include the cost of fuel, service and maintenance charges, repairs, road tax and insurance.
- Personal Expenses (Sundries) -The purchase of toiletries, laundry and dry-cleaning charges, cost of subscription to membership fees of clubs and associations, purchase of gifts, medical bills, expenses incurred on cultural and recreational activities.
- Household Expenses -All the expenses for running the house- electricity, water, fuel, telephone bills, tax, wages of part-time and full time helpers are included here.
Different methods of accounting used in the household are:
1. The Sheet System
It is a very simple method. Single, double or multiple sheets can be used for keeping accounts. The sheet along with the pencil can be hung in any convenient place, for example the back of the door, shelf, window or refrigerator sides. Very often expenses can be written and viewed in a convenient place.
2. Notebook System
It is a very convenient method. Either bound or loose leaf notebooks can be used, since here insertions can be made easily. The book should have columns to indicate the total income, the date, the account head and daily expenses. Neat recording prevents confusion. Calendar and diary are also helpful to keep the accounts.
3. The Envelope System
In one type, a number of envelopes are kept for different budget heads. The portion of allotted income is put in the envelope for each item as per the budget allocation. This system is essentially helpful for those who earn weekly wages. In another system, a large envelope is used in which day to day bills, slips, tickets etc. are put. Later at a convenient time, they can be accounted for. The outside of the envelope may be used for noting down the expenses. This will be an apt one because it reduces confusion.
4. Card File System
Separate cards may be maintained for income – budget allocation, and expenditure on each budget head. All expenses are entered as and when they occur day wise and categorised under each head. Various cards can be filed together. While keeping accounts, one should start a convenient system that is easily workable and make account keeping a regular habit. Savings
Money has to be set aside for investments, insurance premium, for chit funds and other schemes. Best thing is first plan and keep the savings money aside then start spending money for other expenses.