Guidelines to follow when preparing a budget Flashcards Preview

Home Economics: 13.2 - Budgeting > Guidelines to follow when preparing a budget > Flashcards

Flashcards in Guidelines to follow when preparing a budget Deck (7)
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1

List five guidelines for the preparation of a budget

Estimate total income

List all expenditure

Allocate a percentage of income

Allocate savings

Review and evaluate

2

Explain how one estimates their total income as the first part of making their budget
(5)

Include salary/wages

Include benefits or any other form of income

Do not include irregular income such as bonuses

Divide estimate by twelve if making a monthly budget

Divide by 52 if making a weekly budget

3

Why should irregular income not be included when estimating a person's total income?

As these are not guaranteed

4

What expenditure should be listed in a budget?

Essential and discretionary expenditure

5

To what should a percentage of income be allocated to when making a budget?

A percentage of total income should be allocated to each listed expenditure

6

Explain the savings element of a budget
(3)

Every budget contains a saving element to cover unplanned eventualities

Savings allow for funds to be available in times of increased expenditure

Savings should be lodged into a separate savings account

7

Explain the review and evaluate step of planning a budget
(3 points)

Carry out regular reviews of the budget to ensure it is effective

Keep bills and receipts to monitor spending

Recalculate budgets if there is a change in circumstances e.g. change in job