Submitted to:

Submitted by : Harshita
MRs. Jyoti meena
bhargava
Subject : Home management
B.sc. Home science
(family economics)
III yr
Unit :2 family accounting
Benefits of household budget

How to make an Effective Family Budgeting Plan

Record keeping ,family accounting
Saving and Investment
Importance of Saving

Types of Savings and channels of investment

What is a Savings Institution
 Family Budgeting is a plan on how family income
should be spent to provide for family needs without
incurring debts or deficits. It’s the parents primary
task to prepare a budgeting plan. However, every
member must also know how the family income is
budgeted. Through family budgeting, family members
learn to spend money wisely, thus, saving money
which could be use for other family needs. Resources
such as time, energy and utilities are also used well
when income is budgeted. It is a financial map that
help families see where their income is really going
each month.
 A proper household budget is extremely important in
our lives and its absence could lead to many financial
problems.
 A well-made, proper household budget has a great
impact on our financial lives. If we do not have one, we
may have to face financial problems of various kinds. A
household budget is all the more important in this
consumer era because it teaches members of the
family the worth of money. It is, indeed, an important
cog in the wheel that runs a house.
 Once a household budget is in place, it becomes much
easier to bring things under control. It can also teach
younger members of the family the importance of
money, so that they stop wasting money on unnecessary
things. They can utilize this knowledge when they grow
up and start their own families.
 Another important benefit of a household budget is that
it can alert you against possible cash flow problems in
the future. For example, it will let you know if you have
more direct debits from your bank account than your
wage can cover. And once alerted, you can then take
some necessary measures, such as seeking a small loan or
overdraft facility to cover the deficit or get in touch with
the concerned companies regarding the direct debits so
that you can change your payment plans. As a household
budget also gives you a clear picture of the money which
is coming into the house, you can then try to increase it
in various ways that suit you – like finding a better job,
seeking a pay rise, or starting a small new business
 A household budget helps you to identify the areas in
which you spend, and take necessary steps to curtail
expenditure on those items that are non-essential and
unnecessary. Household expenses often spiral out of
control because we have no idea about how the
family’s total outgoings are created. Once a household
budget is in place, it becomes much easier to bring
things under control. It can also teach younger
members of the family the importance of money, so
that they stop wasting money on unnecessary things.
They can utilize this knowledge when they grow up
and start their own families.
 1. Basic Needs
-it is the first thing we should consider in family
budgeting. It is the things we need in our daily life like
Foods, Shelter, Clothes.
2. Allowance or Provisions
-A limited amount or portion of income for daily life
like Provisions/Allowance for Students/Parents that
work. Use for buying foods, beverages and for things
that they need.
3. Bills or Utilities
-such as Electric Bills, Water Bills, Telephone Bills,
Internet Bills, Gas which are paid monthly
4. Savings
-the money saved can be used in emergency
situations. Also it can grow in the form of
investments. It can also came from excess money
from different things.
5. Education
-Tuition Fees and school needs such as textbooks
and other supplies constitute expenses that must
be provided for, especially the daily school
allowances.
6.Transportation
-usually we don’t have cars, so we need to
also budget the transportation expenses
1. Know your income
2. Determine which expenses are needed to be record
3. Base the budget on a system of priorities
4. Have a record of expenses
5. Do the family budgeting planner. Use only the
allotted many for each expenses and as long as
possible don’t get extra money from savings to fulfil
a budget for a expense.
6. If there’s an excess money it is advisable to put or to
add in the savings if not needed to use.
 Accounting, or accountancy, is the measurement, processing and
communication of financial information about economic entities.
Accounting, which has been called the "language of
business", measures the results of an organization's economic activities
and conveys this information to a variety of users
including investors, creditors, management, and regulators.
Practitioners of accounting are known as accountants.

 Types of accounting
 1. Short term account
 2. long term account
 Short-Term Debt
 Current liabilities include any obligations that are due
within one year. Categories of short-term debt include
accounts payable, accrued payroll and accrued payroll
taxes. Current liabilities also include any payments in the
upcoming year required to service long-term debt. For
example, payments on a mortgage due in the next 12
months are considered current liabilities.
 Long-Term Debt
 A long-term debt is any liability owed that is not due for
more than one year. The principal balance of a mortgage is
one common type of long-term debt. Another is the
principal balance, or face value, of bonds sold by the
corporation that will not mature for more than one year.
The unpaid balance of a long-term lease is also a long-term
liability. In some cases, retirement benefits due to
employees are considered long-term liabilities.
Things to be kept in short term accounting:
 Monthly bills ( electric , news paper, water, t.v. And
mobile recharges , etc. )
 Daily expenses
 Medical expenses
 Salary
 Income tax
Things to be kept in Long term accounting
• Mortgage on building
• Purchasing a vehicle
 Service and repair of equipments
 Importance of Saving
Emergency cushion - This could be any number of things: a new roof
for the house, out-of-pocket medical expenses, or a job layoff and
sudden loss of income. You'll need money set aside for these
emergencies to avoid going into debt to pay for what you need.
Retirement – If you intend to retire someday, you'll probably need
savings and/or investments to take the place of the income you'll no
longer get from your job.
Average Life Expectancy – With more advances in medicine and
public health, people are now living longer (and needing more money
to get by).
Volatility of Social Security – Social Security was never intended to
be the primary source of income and should be treated as a supplement
to income.
Education - The costs for private and public education are rising every
year, and it's getting tougher to meet these demands.
Interest rates: Higher interest rates will encourage people to save more.
Availability of appropriate savings schemes: With more options to save
money people will be attracted to save more
Advertising of/knowledge about what is available at financial institutions
Confidence/trust in financial institutions
Size of real disposable income: Disposable income is the income left
after paying taxes. Thus more money left in pockets will encourage people
to save more.
Rate of inflation: when inflation is high people have less money left with
them to save because a major part of their disposable income will be spent
to satisfy their needs and wants.
Save for a future purchase: People might save with the motive to carry
out a future purchase e.g. a house
Precautionary factors: People might be ‘saving for a rainy day’
Tastes and preferences of consumers: It also depends on a individuals
preference. Some people save more than others.
Consumer confidence/expectations about future changes in the
economy, e.g. risk of unemployment may lead to people saving more
From an investors’ perspective the infrastructure asset class provides
appealing investment characteristics which evolve due to their physical and
economic characteristics:

Stable and predictable cash flows: By nature infrastructure facilities

exhibit steady demand with stable and predictable cash flow streams. In
some cases income is regulated or backed by certain types of guaranteed
uptake or purchase agreements
Long term predictable income streams: Implied by the long life span of
infrastructure facilities. For basic infrastructure facilities operating costs
are low compared to the initial investment and investment returns are
dominated by yield. These features are attractive to investors seeking long-
term, stable, yield dominated investments. In addition the revenue stream
may be supported by "shadow tolls", government subsidies or other non-
market interventions
Inflationary hedge: The income streams from regulated
infrastructure facilities are often linked to inflation providing a
natural inflation hedge against movements in market prices
Insensitive returns of investment: In particular with respect to
fluctuations in business cycles, interest rates and stock market
movements
High credit rating: Since infrastructure exhibits stable and
predictable cash flows they usually have a comparatively high credit
rating
Low correlation and low volatility: This arises from the fact that
infrastructure exhibits unique investment characteristics which
deviate fundamentally from traditional asset classes. In particular
the inelastic and stable demand for the goods and services provided
imply comparatively low volatility and correlation
Types of Savings and channels of investment
Savings Accounts
Savings accounts are among the most basic ways to save money. All banks offer them,
usually for free. The money earns interest each month,

Certificates of Deposit
Certificates
. of deposit are another savings option offered by most banks. CDs are long-
term savings accounts into which a depositer place a given sum of money for an
agreed-upon time, often five or 10 years.

Annuities
Annuities are low-risk investments that require one-time or ongoing payments, and
pay out a specified sum. Investors who purchase annuities hope to receive more in
payments than they put into the annuity. An annuity may be structured to provide
income during retirement, offering a predictable payment for life.
Mutual Funds
A mutual fund is an investment product that uses stocks to earn money for a large
group of investors. The fund's manager pools money from investors and uses it to buy
many stocks. Some mutual fund managers buy and sell shares of stock daily or even
hourly.

Real Estate
Real estate is another type of investment. While most homeowners hope that their
own homes' values will rise, real estate investors buy land or rental property with the
expectation of selling it in the future.

Commodities
Investing in commodities involves predicting the future price of a product or resource.
Commodities investors buy futures contracts, which represent the right to buy a
commodity, such as crude oil, corn or wheat, for a set price at a given time in the
future.
Bonds-
An Obligation issued by the corporation that promises the holder to receive
fixed annual interest payments and payment of the principal upon maturity
 Financial Institutions-
Retained Earnings- the practice of using corporate profits
for capital investment rather than dividend payments

Financial Intermediaries, Banks-

A bank is a financial intermediary that
accepts deposits and channels those deposits
into lending activities, either directly by loaning or
indirectly through capital markets. A bank links
together customers that have capital deficits and
customers with capital surpluses.
Financial Intermediaries
Mutual Fund- A mutual fund is a type of professionally managed collective
investment scheme that pools money from many investors to
purchase securities.[1] While there is no legal definition of the
term mutual fund, it is most commonly applied only to those collective
investment vehicles that are regulated and sold to the general public.
They are sometimes referred to as "investment companies" or
"registered investment companies".
 Stocks- A type of security that signifies ownership in a corporation and represents a
claim on part of the corporation's assets and earnings.

Savings and Loans-

A savings and loan association (or S&L), also known as a thrift,
is a financial institution that specializes in
accepting savings deposits and making mortgage and other loans.
They are often mutually held (often called mutual savings banks), meaning that the
depositors and borrowers are members with voting rights, and have the ability to
direct the financial and managerial goals of the organization like the members of
a credit union or the policyholders of a mutual insurance company. While it is
possible for an S&L to be a joint-stock company, and even publicly traded, in such
instances it is no longer truly a mutual association, and depositors and borrowers no
longer have membership rights and managerial control. By law, thrifts can have no
more than 20 percent of their lending in commercial loans — their focus on
mortgage and consumer loans makes them particularly vulnerable to housing
downturns.
 Insurance Company-

Insurance is the equitable transfer of the risk of a loss, from one entity to another in
exchange for payment. It is a form of risk management primarily used
to hedge against the risk of a contingent, uncertain loss.
An insurer, or insurance carrier, is a company selling the insurance; the insured, or
policyholder, is the person or entity buying the insurance policy. The amount
of money to be charged for a certain amount of insurance coverage is called the
premium. Risk management, the practice of appraising and controlling risk, has
evolved as a discrete field of study and practice.

The transaction involves the insured assuming a guaranteed and known relatively
small loss in the form of payment to the insurer in exchange for the insurer's
promise to compensate (indemnify) the insured in the case of a financial (personal)
loss. The insured receives a contract, called the insurance policy, which details the
conditions and circumstances under which the insured will be financially
compensated.
 What is a Savings Institution?

A savings institution focuses on home loans and other real

estate financing. They serve as organizations that work with
members to raise funds. Most of the funds deposited into
savings institutions are from consumers for the purpose of
establishing a home mortgage. Savings institutions
typically focus on customers and closely serve local
communities.
 Banks = A bank is a financial intermediary that accepts deposits and channels
those deposits into lending activities, either directly by loaning or
indirectly through capital markets. A bank links customers that have
capital deficits and customers with capital surpluses.

Saving banks- The savings banks are especially for those who belong to the low
income groups or those who are salaried. The savings banks
function with the intention to help people culminate the saving
habits, which is especially for those who belong to the lower
income groups or those who are salaried. The post office is also in
a way a saving bank, where people can open recurring accounts to
save money.
Commercial Banks-
The main function of these types of banks is to give financial services to the
entrepreneurs and businesses. It gives financial to the businessmen like providing
them with debit cards, banks accounts, short term deposits, etc. with the money
deposited by people in such banks. The commercial banks also lend money to these
businessmen in the form of secured loans, unsecured loans, credit cards, overdrafts
and mortgage loans.
Banks allow people to open
accounts to which they can
deposit there surplus
finance to which in returns
they pay an interest on the
amount by which not only
money is saved but also
increase money ..

Some banks even provide

wide range of opportunities
for saving for saving money.
By issuing some national
documents in which a
person invest his money
and get it back with
interest.
Post office-
A post office is a customer service facility forming part of a
national postal system.[1] Post offices offer mail-related services such as
acceptance of letters and parcels; provision of post office boxes; and sale
of postage stamps, packaging, and stationery. In addition, many post
offices offer additional services: providing and accepting government
forms (such as passport applications), processing government services and
fees (such as road tax), and banking services (such as savings
accounts and money orders).The chief administrator of a post office is
a postmaster.

The Post Office Savings Bank has emerged from its limited role of
providing the poor people with a safe means of securing their savings to a
major instrument for mobilising savings for meeting development
expenditure of the Nation and the State as well. The Government have
been introducing various schemes from time to time to suit the varying
requirements of individuals.
Credit Union-

A credit union is very similar to a bank in services rendered, but varies in the
way that it provides those services.
Credit unions are nonprofit organizations that are owned by the people who
deposit money into accounts. Credit unions are exempt from paying taxes on
this deposited money because of their nonprofit role.
Account holders are considered members of the credit union and deposits are
seen as “buying shares” in the credit union. Customers must meet specific
credit union qualification criteria to join. These members are paid dividends
on the credit unions’ earnings, much as shareholders are paid dividends on a
company’s stock earnings.
Credit unions most often operate on the local level. Members share some sort
of connection, often an occupation or social status. Because credit unions
generally have fewer customers and fewer employees than banks, the
interpersonal connections between the two are often stronger than those in
banks.