UNIV. OF CALIFORNIA HOUSEHOLD ARITHMETIC BUDGETS AND ACCOUNTS THE FAMILY BUDGET THE family budget is a statement of the probable income and of the proposed expenditures for a definite period of time. The amounts may be estimated by the week, or month, or year. The budget is made by determining beforehand the probable income, the probable needs of the family, and the way in which the income is to be divided to meet those needs. The budget has been called the family compass. Only by following as closely as possible the course laid down in the budget, can the family be reasonably certain of attaining its desired goal. ANNUAL INCOME Successful budget-making must be based upon an accurate, estimate of the family income. If a man is employed by the year his income is more or less fixed; if he depends upon the day's wages his income will depend upon whether or not he is continuously employed; if he is a farmer his income depends upon success with his crops; if he is a doctor or lawyer his income varies from month to month according to the number of his patients or clients. EXERCISE I 1. Mary Brown worked for 4 months in a millinery shop at $13 a week. She was laid off during the slack season, and after 7 weeks secured work as a salesgirl at $12 a week. Illness kept her away for 3 weeks. She spent 2 more weeks seeking work and finally secured a position in a millinery shop at $12.50 a week where she remained until the end of the year. What was her income for the year? Her average weekly wage? 2. In trades where there is a slack season the hands may be MIA CE laid off when the work is light. A man works 9 months and is laid off for 3 months during the winter. If he receives $4.50 per day while at work, what is his annual income? His average daily wage? (Estimate 26 days to the month.) 3. Which is the better job for a girl to take, one that pays $18 a week, with two slack seasons of 6 weeks each when she will probably be laid off, or a steady job that pays $14 a week? If she takes the first, how much should she set aside each week to provide for the periods of unemployment? 4. A public school teacher receives $85 a month for 10 months. What is her annual income? Her average monthly income? 5. What is the total annual income of a lawyer who clears $2375 in his practice and who receives interest from $4000 invested in bonds at 5 per cent.? What is his average monthly income? 6. Mrs. Lewis found upon going, over the accounts that the profits from the farm for the past five years had been as follows: $2100, $1800, $1500, $1600, $2000. What was the average yearly income? What would you advise Mrs. Lewis to use as the basis for her budget? Why? BUDGET DIVISIONS A budget, properly speaking, is an estimated division of the income into proposed expenditures for various purposes. The term is also used to signify the actual division of the expenditures for a year. The two kinds of budgets are sometimes distinguished by the terms "actual budget " and " theoretical budget." Actual budgets are an aid in making theoretical budgets. The experience of others serves to show the possibilities and limitations of an income, but cannot be an infallible guide. In each family there are special needs to be met and special difficulties to be overcome. In studying budgets, allowance must be made for the fact that most of the budget data available were compiled previous to the Great War, when prices were lower. In budget making, the nature of the expenditures to be included in each division should be carefully determined, and the expenditures grouped under the proper heading. General directions regarding the items to be included in each group are as follows: I. Food: All articles of food. II. Shelter: Rent, taxes, insurance, repairs, interest on mortgage, car-fare to and from work. III. Clothing: All articles of clothing, including underwear, dresses, suits, shoes, hats, etc.; materials for making such articles; cost of making and repairing them. IV. Operation: Fuel for heat and light, household supplies, refurnishing, repairs, service (including laundry and expense of barber, etc.), telephone, express, and all other items connected with running the home plant. V. Advancement or Higher Life: Church, benevolence, insurance, savings, travel, books, recreation, health, entertainment, education, postage, telegrams, the pleasures which make for social advancement, and other things not necessary to the maintenance of the merely physical efficiency of the family. EXERCISE II The per cent. of the income spent for each division of the budget is found by dividing the actual amount of money spent for items in that division by the total amount of the income. Problem. Find the per cent. of the income spent on each division of the budget if the total income of $1200 was spent as follows: Food, $414; shelter, $240; clothing, $208; operation, $158; advancement, $180. Thus: $414 $1200= .345, or 34.5 per cent., for food. $240 $1200.20, or 20 per cent., for shelter. 1. The following are actual budgets of families in different parts of the United States. Find in each case the per cent. of the income spent for each of the five divisions of the budget, and tabulate the results. Include incidentals under advancement. 1Adapted from Bruère, Increasing Home Efficiency. Used by permission of and special arrangement with the Macmillan Company, Publishers. |