R. Delaney CHAPTER 3 BUDGETS: Preparing a Budget.

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Presentation transcript:

R. Delaney CHAPTER 3 BUDGETS: Preparing a Budget

R. Delaney Preparing a Budget The following should be kept in mind when preparing a budget: A budget surplus happens when the planned income is greater than the planned expenditure. A budget deficit happens when the planned expenditure is greater than the planned income. Net cash is the difference between total planned income and total planned expenditure. Opening cash is the amount of money a family plans to have at the start of a month or period. Closing cash is the planned net cash plus the planned opening cash.

Figures from pages 17 and 18 in textbook R. Delaney Figures from pages 17 and 18 in textbook BLACK FAMILY BUDGET Jan Feb March April Total J to A PLANNED INCOME € € € € € The totals for January to April are calculated by adding together the individual amounts for each of the 4 months. For Brian’s salary it is €3,700 + €3,700 + €3,770 + €4,500 = €15,600 Brian Black -- Salary 3,700 3,700 3,700 4,500 15,600 Bernie Black -- Salary 3,500 3,800 3,500 3,500 14,300 Child benefit 180 180 180 180 720 Interest on savings 300 300 TOTAL INCOME (A) 7,380 7,680 7,380 8,480 30,920 PLANNED EXPENDITURE Fixed Mortgage 1,800 1,800 1,820 1,820 7,240 Car insurance 500 500 House insurance 50 50 50 50 200 Subtotal 2,350 1,850 1,870 1,870 7,940 Irregular Household expenses 2,000 2,000 2,000 1,500 7,500 Heat and light 250 1,000 200 1,450 Telephone 80 230 80 260 650 Car running costs 260 260 260 260 1,040 Subtotal 2,590 3,490 2,540 2,020 10,640

Budget continued Discretionary Jan Feb March April Total J to A R. Delaney Budget continued Discretionary Jan Feb March April Total J to A Birthdays 150 200 350 Holidays 500 700 1,000 2,200 Entertainment 400 400 400 250 1,450 Subtotal 900 550 1,300 1,250 4,000 TOTAL EXPENDITURE (B) 5,840 5,890 5,710 5,140 22,580 TOTAL INCOME (A) 7,380 7,680 8,480 30,920 Net cash = A - B 1,540 1,790 1,670 3,340 8,340 Opening cash 500 2,040 3,830 5,500 500 Closing cash 2,040 3,830 5,500 8,840 8,840 Total expenditure each month is calculated by adding the 3 subtotals together