A budget is a plan for the future. It shows planned income and expenditure. This means that it allows a household to take action before a deficit happens.
Steps an individual or family can take to deal with a budget deficit include:
• Working overtime to earn extra income.
• Spreading repayments of bills over the year, rather than paying in a lump sum. For example, car insurance could be paid monthly rather than annually.
• Cutting discretionary spending. For example, eating out less often. • Shopping around to get better deals on groceries and other purchases.
• Securing a loan or an overdraft. Remember: money borrowed from financial institutions has to be paid back with interest.
PRESENTING HOUSEHOLD FINANCES IN A CHART
In addition to preparing financial information in a budget, it is also useful to show a household’s finances visually using a chart. This can help a household to identify trends or patterns in its spending.
Example The Lee family’s irregular expenditure on groceries could be shown in a chart.
Irregular Groceries
Jan 680 Feb 680 Mar 750
Bar Chart Showing the Lee Family Grocery Expenditure for Jan–Apr 1000 800 600 400 200 0
Bar chart showing grocery expenditure for the Lee family
€ Jan Feb Month Mar Apr Groceries
This bar chart provides a clear picture of the family’s expenditure on groceries over the four months. At a glance, we can see that spending on groceries is increasing each month. This is something that the Lee family may wish to reconsider.
A pie chart or line graph could also be used to show a household’s finances. 51 Apr 880 Total 2,990
