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What is the Family Budget?

In this article, we will know what is the family budget. Studying the family budget helps the government to come up with new tax plans. Income from tax on luxury items like cars, cigarettes, radiograms, jewellery, is likely to increase. The family budget is a plan at the family level. It gives information about how much a family spends on other things.

What is the Family Budget

What is the Family Budget

A family budget is a budget of income, expenses and balances made by a family to balance income and expenses. These budgets are similar in size to government or large business budgets but smaller. On the one hand the estimated annual income and on the other hand food expenses, rent, electricity etc.

The balance is calculated by estimating the required, specific, non-financial, social and personal expenses. Of course, by comparing the actual day-to-day expenses from time to time, the cost of each item can be increased or decreased. This sheet is a plan sheet at the family level. A survey of how families spend their monthly income is also called a ‘family budget’.

A comparative study of family budgets shows that, although family income increases, household expenses do not increase at the same rate. In this regard, the famous nineteenth-century German scientist Ernst Engel comparatively studied the estimates of some families in Prussia and made some important general assumptions. They are known as ‘Angels Family Rules’.

According to the rules, “If household income increases, household expenditure on all goods does not increase at the same rate, the percentage of expenditure on food decreases and expenditure on amenities increases.”

Such estimates are made for households living in specific areas with different occupational groups, smaller sizes and at different income levels. They show the percentage of total expenditure as a percentage of expenditure on each item. Surveys are used to measure demand for consumer goods, such as food, to determine a household’s consumption level and its trends, as well as to indicate changes in prices.

The family budget is studied to calculate the standard of living and to determine the inflationary allowance of factory workers, employees, etc. Since the inflation allowance is related to the living index, it is more or less the same. A change in the general price level means that the standard of living of workers fluctuates and inflation allowance has to be adjusted accordingly.

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