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  • 1. The Budget Estimated Income ˃Estimated Expenditure Surplus Estimated Income ˃Estimated Expenditure deficit Estimated Income =Estimated Expenditure Breakeven Planning a Budget Estimate Income Estimate Expenditure TOTAL INCOME - TOTAL EXPENDITURE = NET CASH Record opening cash in the firstmonth and in the total column. Closing Cash = Net + Opening CashCash The closing cash for one month is the opening cash for the next.
  • 2. The Budget If a family had a deficit for the year, what possible changes could they make to the household budget? 1. Cut back on discretionary expenditure- birthdays, holidays, entertainment, presents, etc. 2. Reduce household coststhrough better buying. 3. Cut back on household costs and car costs. 4. Spread large payments over a number of months rather than paying for them all at once, e.g. car insurance, health insurance. 5. Try and increase income by doing overtime or part-time work. CURRENT EXPENDITURE This is spending on items that we need to run the house on a daily basis, e.g. food, fuel, clothes, etc. CAPITAL EXPENDITURE This is spending on items that will last a long time,e.g. car, television, cooker, washing machine, etc. ACCRUALS These are services that we do not pay for at the time of use, e.g. electricity, telephone bill. We pay for the amount we owe when we get the bill. SAVINGS This is putting money aside for the future, e.g. emergencies, to buy a car, to pay for children’s education. Remember: A budget is a plan which forecasts future income, future expenditure and savings. We must guess what these figures will be.