Family Budgeting - Account Keeping

Account Keeping

The only best way to determine whether the family income is being well spent or not, is by keeping accounts. While the budget is a plan for future spending, account keeping is a record of past spending. A household account is a record of expenditures actually incurred by the family in the course of a day, or a month. It will include the income earned by the family, the expenditure incurred, and the amount spent on each item of expenditure.

Generally accounts help to

1.     Show where the money goes actually.

2.     Check the amount spent on each item according to the budget.

3.     Check the adequacy of allotting the income over the items.

4.     Give basis for a better planning of expenditure in future.

5.     Change our way of life either by reducing the consumption of certain costly food items, or taking up extra job etc.

Different methods of accounting used in the household are given below.

1. The Sheet System

It is a very simple method. Single, double or multiple sheets can be used for keeping accounts. The sheet along with the pencil can be hung in any convenient place (e.g.) back of door or a shelf.

2. Note book System

It is a very convenient method. Either bound or loose leaf notebooks can be used, since here insertions can be made easily. It is especially convenient for children if they help in account- keeping. The book should have columns to indicate the total income, the date, the account head and daily expenses. Neat recording prevents confusion. Calendar and diary are also helpful to keep the accounts.

3. The Envelope System

In one type, a number of envelops are kept for different budget heads. The portion of allotted income is put in the envelope for each item as per the budget allocation. This system is essentially helpful for those who earn weekly wages.

In another system, a large envelop is used in which day to day bills, slips, tickets etc. are put. Later at a convenient time, they can -be accounted. The outside of the envelope may be used for noting down the expenses.

4. Card File System

Separate cards may be maintained for income - budget allocation, and expenditure on each budget head. All expenses are entered as and when they occur daywise and categorised under each head. Various cards can be filed together. While keeping accounts, one should start a convenient system that is easily workable and make account keeping a regular habit.