A Budget Comparison Statement


In the previous chapter we looked at how a household plans for the future by preparing a budget. In this chapter, we have looked at how a household records and analyses the transactions that they actually make – now we will look at how a household can compare what they planned to do with what they actually did using a budget comparison statement.


This is useful for them to see: ґ Did they overspend in any area? ґ Was their budget accurate or should they amend future budgets? ґ Was there any unusual income or expenditure that occurred?


A household can directly compare their planned (budgeted) income and expenditure to the actual income and expenditure to calculate the difference between them.


Groves Reilly Household Budgeted Actual Difference €


€


Planned Income Sarah Groves Deirdre Reilly Child Benefit Total Income


Planned Expenditure Fixed House Mortgage House Insurance Car Loan Subtotal


Irregular Household Expenses Car Running Costs Light and Heat Costs Broadband Subtotal


Discretionary Presents


Entertainment Holidays Subtotal


Total Expenditure Net Cash


11,050 13,000 1,260


25,310


12,000 12,500 1,260


25,760 €


+950 -500 0


+450 Budgeted income is


compared to actual income, with the difference shown using a +/- figure. This shows if the actual income was greater than planned, e.g. Sarah’s actual income was €950 more than planned.


9,200 350


1,050 10,600


4,225 1,750 1,480 180


7,635


680 840


1,395 2,915 21,150 4,160


9,200 375


1,050 10,625


4,480 2,150 1,330 180


8,140


800 925


1,500 3,225


21,990 3,770


0


+25 0


+25


+255 +400 -150 0


+505


+120 +85


+105 +310 +840 -390


Income was €450 higher than budgeted, but spending was €840 higher – so overall the net cash of -€390 shows they overspent by €390 compared to their original plan in their budget.


A budget comparison statement is a great tool to spot big variations from your budget. For example their car cost €400 more than planned, and they spent more on all discretionary items than planned – this kind of information might make it easier for them to budget better next time.


141


STRAND 1


CHAPTER 13: Bank statements


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