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.