Journal of American Science, 2011;7(2) http://www.americanscience.

org

A Theoretical Study of Family Resource Management

1
Mehdi Yadollahi & 2Laily Hj Paim
1
Dept. of Resources Management& Consumer Studies, Putra University, Malaysia & University of Payame Noor,
Sirjan, Iran; E-mail: mfma155@yahoo.com
2
Dept. of Resources Management & Consumer Studies, Putra Universiti, Malaysia

Abstract: Family resource management has a fundamental role in helping meet and alter the increasing
complexities faced by the families. In this way, this article attempts to describe the theories of family economic
management. To solve the economic problems we need to improve the economic status of families who fail to
manage their budget, which results in high debt levels and a lack of personal savings. The implication of this study
arises from the fact that there has been little research carried out on the family economic status. Theoretically, the
findings of this study enrich the knowledge concerning family economic and management functions.
[Mehdi Yadollahi & Laily Hj Paim. A Theoretical Study of Family Resource Management. Journal of American
Science 2011;7(2):1-6]. (ISSN: 1545-1003). http://www.americanscience.org.

Key Words: Family resource, Economic function, Economic organization

Introduction and implementing are in the fourth step of the process.

Family economics is now a honourable and In the fifth step, the goals are accomplished or fulfilled
growing field (Becker, 1965). Economic status and and the process as a whole is evaluated. Then, the
family are among the most widely used terms in the information returns to the system and enables the
field of family economics and household management. individual's overall management knowledge and ability
Family resource management has a fundamental role in to grow (Goldsmith, 1996). Each person has his or her
helping meet and alter the increasing complexities own management style, or way of making decisions
faced by the families. Household management is the and acting. Various factors including history, biology,
process of using the resources to attain its goals culture, personality, and technology influence the
through planning and taking the steps necessary to individual's management style. But the field of
meet these goals. A crucial part of the management resource management is even broader than these
process is the allocation of resources for the influences suggest (Goldsmith, 1996). Life
appropriate goals (Deacon & Firebaugh, 1988). In management, on the other hand, encompasses all the
other words, management is the process of using what decisions a person or family will make, and the way
one has to get what one wants. Resource recognition is their values, goals, and resources affects their decision-
the realization of the skills, talents, and materials that making. It includes all the goals, events, situations, and
the household possesses (Goldsmith, 1996; Hallman, decisions that make up their lifestyle. Life management,
1990). The management process involves thinking, thus, is a holistic approach that looks at management as
action, and results. Although household management is a process that evolves over an entire life span
practical, it is not necessarily simple. It becomes (Goldsmith 1996).The study of household management
complex because the choices of the individuals and the is a combination of theory, concepts, technique,
family are constrained by limited resources. Each research, and practice. There is not only one
individual has his or her own resource, attitudes, talents, management theory or framework; instead,
and skills that are brought to bear on situations. management is an interdisciplinary field that borrows
Management, therefore, has to be viewed within the concepts and theories from related disciplines
context of the greater life environment, which is (Goldsmith 1996). Much of a household's decision-
constantly changing (Goldsmith, 1996). Household making shaped by the environmental settings in which
management consists more than merely the economic the family functions. These environments either
management of resources to produce a high standard of constrain this decision-making or offer opportunities
living through consumption. The management process for the family. Because the physiological and the
begins with a problem, need, want, or goal, which has psychological makeup of the family members differ, so
to be identified. Once identified, the individual or do as the environments in which they interact, it
family moves to the second step, which is the becomes essential to view decision-making from an
clarification of values. The third step involves ecological perspective (Paolucci et al., 1977).
identifying the available resources. Deciding, planning,
http://www.americanscience.org/journals 1 editor@americanscience.org.
 Journal of American Science, 2011;7(2) http://www.americanscience.org

Family Resource Management function of the family in society. Traditional economic

Family resources are the means for satisfying theories typically focused on men as income-earners
our needs and reaching our goals. and women as homemakers and non-participants in the
-Money, salary, rent, interests from savings bank labour force. Becker analyzed the effects of women's
account etc. participation in the labour force on the division of
-House for living and working. labour in both the market and the household.
-Time, like an hour a day, month etc. One model in Becker's treatise concerns the
-Energy to do work. allocation of energy (or effort) among various
-Knowledge, skills and abilities for doing our work, household and market activities. According to Becker,
like sewing, driving, "firms buy a package of time and effort from each
swimming, etc. employee, with payment tied to the package rather than
-Material goods like household equipments, car etc. rendered separately for units of time and effort" (p.65).
-Community facilities like park, hospitals, roads, bus This premise explains lower earnings by women who
etc. are usually the primary persons responsible for
The resources possessed and utilized by persons are childrearing and household duties. For example women
called human resources. Non-human resources are earn less when less energy is available for the labour
external to individuals, but they can be possessed and force because of sick children require mothers' care at
utilized by them (Home Science 2010). home, or the inability to work required hours due to
childcare needs. This premise also explains the affect
Family Resources of illness on family economics (Backer 1991/1993).

Economic Organization of the Household

The economic organization of the household
is the main approach of the economic family. It has
Human Non-human described by Bryant in 1990. Bryant synthesized
various threads of research and scholarly works
Time Money regarding economics of the family into a single text on
Energy House the subject. According to Bryant the family is
Skills Material goods considered a household, a smaller unit of the larger
Community society, that forms to pursue the goals of "satisfaction
Abilities etc. seeking" (p.1) and "increasing the well-being of their
facilities
Figure 1: The family resources members" (p.2). Bryant uses the concepts of well-being
and satisfaction interchangeably with utility, which he
Family structural-functional theory defined as preferences a household has for goods and
This theory provides a foundation for services for meeting goals. He states, "The household's
understanding relationships between family and health preferences reflect its likes and dislikes, its views as to
care systems (Friedman, 1998; Pratt, 1976).The family what will increase and what will decrease its well-
is a basic social unit that meets both individual and being, its goals if you will" (p.17). The economic
societal needs and interacts with other societal organization of the family refers to the size, structure,
institutions. Family structure includes family and composition of the household as well as the
composition, size, and roles. Function refers to why the patterns of resource use and of activities pursued by the
family exists, which is to meet the needs of both household "(pp.5-6).
individuals and society. It is through the family Circumstances in the broader social
structure that family functions occur. Within the environment also affect the available resources of a
context of family structural and functional theory, a household to achieve the goal of well-being. According
more specific understanding of the relationships among to Bryant (1990) conditions of both inside and outside
family economics, quality of life, and changes in the the household determine the amounts and kinds of
health care system is provided by an economic resources possessed by the household. The
approach to families. Becker's treatise on the family productivities of each resource in the activities pursued
(1991/1993) is a seminal work on the economic and the satisfaction the household receives from the
perspective of the modern family. Higher divorce rates, activities. The conditions inside and outside the
lower birth-rates, single-parent households, working household change, thus the patterns of resource use and
mothers, and increased life span led Becker to of activities pursued by the household change (Bryant,
reformulate traditional economic theories regarding the 1990). In this model and in Becker's model
http://www.americanscience.org/journals 2 editor@americanscience.org.
 Journal of American Science, 2011;7(2) http://www.americanscience.org

management practice is viewed as an investment in failure of consumers to adopt such practices (Beutler &
human capital. Income and earning potential is Mason, 1987; Davis, 1988; Godwin & Carroll, 1986;
increased when people practice management and Schnittgrund & Baker, 1983) suggests that even
getting better result than the past. On the other hand, a affluent households do not see the balance sheet as a
person who has less management knowledge tend to useful financial tool. Davis (1987) found that lack of
have lower financial resources comparing to those with time and knowledge were the two reasons most often
higher knowledge. To summarize, Becker's and given for not using recommended practices of
Bryant's family economic theories are based on the budgeting, record keeping, comparing records to the
assumptions that human behaviour is goal directed, and budget, and preparing a balance sheet. The need for
humans make rational choices concerning how goals budgeting financial resources and wise use of credit are
are met. Families form to pursue the goal of most often felt by those with low incomes or who are
satisfaction of its members. Income is a resource in debt (Davis, 1987). To encourage adoption of
available to use on goods and services needed by a financial management practices, Walker, Tremblay and
family to achieve its goals, including the health, Parkhurst (1984, p.429) recommend that educational
educate and economic objectives of family members. programming be inexpensive, uncomplicated, and
readily accessible (Walker et al., 1984).
Family Financial Management
Effective financial management as defined by Steps in the management process
Schnittgrund and Baker (1983) combines financial According to the literature review from previous
management practices and outcome results such as the studies, there are four steps of management. To achieve
type of budget used, the frequency of saving, and the our goals with limited resources, we have to follow a
frequency of financial management problems in the systematic method. Management involves the
family. Research shows that consumers believe following steps:
financial management practices like budgeting and • Planning
saving is valuable (Godwin & Carroll, 1986; Mullis & • Organizing
Schnittgrund, 1982; Schnittgrund & Baker, 1983). • Controlling
However, most studies relating to financial • Evaluating
management practices identify the audience using
recommended financial management practices rather Step 1: Planning
than the results of using the practice. The first step in management consists of
Characteristics of those who adopt thinking in advance of what needs to be done i.e.,
recommended management practices have been the planning. A simple way to plan is to make a list of all
topic of previous research. Beutler & Mason (1987) the things that need to be done (Resource Management
studied factors associated with using formal budget 2010). It means both to assess the future and make
planning. They found that young, married, and well- provision for it” (Fayol, 1949, p. 43)".
educated households with high demand on available
resources were more likely to adopt the practice of Step 2: Organizing
written budgets. Level of income did not significantly Organizing involves assembling resources and
affect the practice of written budgets. Level of income fixing responsibilities Fayol (1949) enumerates the
did not significantly affect the practice of budgeting. managerial duties of organizations that must be
Most families who budgeted their money, compared to realized through personnel. Fayol considers the
families who did not budget, believed that they could functional components of organizations along with the
increase their satisfaction with financial management constituent personnel, and discusses the ideal
by planning expenditures (Mullis & Schnittgrund, conditions required of each in considerable detail.
1982). Rosenfield and Neese-Todd (1993) showed that
most aspects of the quality of satisfaction with financial Step 3: Controlling
status are related to the individual's perception of their It has consists of the ongoing, routine
control over finances (Rosenfield & Neese-Todd, verification of plan implementation, instructions issued,
1993). Women, more often than men, view themselves and principles. Controlling applies to all processes. Its
as powerless and lacking essential resources to be able purpose is to identify weaknesses and problems such
to make changes in their lives (Burman, 1994). Even that they can rectify and recurrences prevented.
though financial management practices have been
proven to increase net worth and satisfaction with Step 4: Evaluating
financial resources, there is evidence of resistance and
http://www.americanscience.org/journals 3 editor@americanscience.org.
 Journal of American Science, 2011;7(2) http://www.americanscience.org

The evaluation helps to understand the Estimation of this functional form is appropriate for
weaknesses and mistakes so that it is checked and will broadly defined expenditure categories like clothing
not be repeated in future. This is also called looking (Dardis, Derrick, & Lehfeld, 1981a, 1981b; Wagner &
back or “feedback”(Home Science 2010). Hanna, 1983), in which all or most households report
expenditures during the survey period. Consequently,
Engel Curve Analysis by utilizing the concept of wants, Engel devised a
In Engel curve analysis, the choice of a classification method that enabled him to empirically
functional form is based on both economic and measuring the impact that particular wants have on
statistical considerations (Prais & Houthakker, 1971) . consumption over a range of observed income. He did
The simplest of these is linear. Theoretically, this is a so by classifying expenditures into the want for
plausible relationship because in a complete system of nourishment, clothing, accommodation, heating and
demand equations linearity satisfies the adding up light, household goods, spiritual education (education
criterion (Phlips, 1983) that the sum of the one at all and entertainment), public safety, health and recreation
income levels (Phlips, 1983; Prais & Houthakker, 1971) and personal services (Engel 1857:6). Engel did not
In statistical analysis, the fit of linear Engel curves has create a separate category for travel and trade,
been found to be poor (Phlips, 1983), leaking reasoning that these types of expenditures are not end
economists to use other functional forms. From a purposes in themselves, but that they were done for
theoretical point of view, this functional form is not other purposes, e.g. expenditure on travel contributed
desirable because it violates the adding-up criterion to either work or pleasure (Engel, 1857).
(Deaton & Muellbauer, 1980). However, the tradition Therefore, those wants whose expenditure is
of household budget analysis has been to choose left at the lowest level of observable income can be
functional forms on the basis of statistical fit (Deaton understood to be the most urgent. In turn, he reasoned
and Muellbauer, 1980). The double- logarithmic form that a rough approximation for public welfare can be
is useful in expenditure studies because the income attained by investigating how much of the consumer
elasticity of expenditures for the good in question can budget is dedicated the want for nourishment, which
be read directly from the income coefficient. appeared to be the most basic want (Engel 1857:50).

Family Management

Through the process of

Planning Organizing Controlling Evaluating

Values The use of family resources Standards

To achieve goals

Figure 2: The processes of family management (Home Science, 2010)

http://www.americanscience.org/journals 4 editor@americanscience.org.
 Journal of American Science, 2011;7(2) http://www.americanscience.org

Table 1: Classification of Expenditure Categories

Wants Relevant expenditures
Nourishment Daily nourishment from meals and beverages, spices, stimulants

Clothing, linen,.. Clothing and shoes of all kinds

Housing Shelter, furniture, household appliances

Heating and lighting Wood, heating, lighting via candles, oil and gas

Appliances for work Tools, machines, mechanical instruments; crockery and vessels etc;

Intellectual education Tuition,; worship; scientific equipment, literary and artistic production

Public safety Legal protection; administration; police; state defence; care for the poor etc.

Health, recreation, Medical treatment and pharmaceutical expenses, bathing;

Personal service Personal services attained from use of domestic servants of all kinds.
Source: (Engel, 1857)

Conclusion Davis, E. P. (1987). Patterns of family financial

One of the most important reasons for management. Papers of the Western Region
researchers to study family economic status is that any Home Management Family Economics
community development in all dimensions starts with Educators, 2, 108-112.
the family. Theoretically, the findings of this study will Davis, E. P. (1988). Who prepares a balance sheet? An
enrich the knowledge concerning family economic and exploratory analysis. Papers of the Western
management functions. The most important Region. Home Management Family
implications of this study is that researchers and Economics Educators,, 3, 47-49.
practitioners can able to develop effective programmes Deacon, R. E., & Firebaugh, F. M. (1988). Family
for families, especially in economic aspects. Resource Management. Principles and
Applications. Boston: Allyn and Bacon, inc.
References Deaton, & Muellbauer, J. (1980). Economics and
Becker, G. S. (1965). A Theory of the Allocation of Consumer Behavior. New York: Cambridge
Time. Economic Journal 299(75), 493-517. University Press.
Beutler, F., & Mason, J. W. (1987). Family cash flow DeVaney, S. A., Gorham, L., Bechman, J. C., &
budgeting. Home Economics Research Haldeman, V. A. (1995). Saving and investing
Journal, 16(1), 3-12. for retirement: The effect of a financial
Bryant. (1990). The economic organization of the education program. Journal of the Family
household. New York: Cambridge University Economics and Resource Management
Press. Biennial, 1, 153-158.
Burman, S. (1994). The disease concept of alcoholism: Engel, E. (1857). Die Produktions- und
It's impact on women's treatment. Journal of ConsumtionsverhÄaltnisse des KÄonigreichs
Substance Abuse Treatment, 11(2), 121-126. Sachsen, reprinted with Engel (1895). Anlage,
Dardis, R., Derrick, F., & Lehfeld, A. (1981a). 1, 1-54.
Clothing demand in the United States: A Fayol, H. (1949). General and Industrial Management:
crosssectional analysis. Home Economics Constance Storrs Sir Isaac Pitman & Sons
Research Journal 10, 212-222. Ltd.london.
Dardis, R., Derrick, F., & Lehfeld, A. (1981b). Friedman, M. (1998). Family nursing: Research. them)'.
Clothing demand in the United States: A & practice. (4lh ed.): Stamford, CT: Appleton
crosssectional analysis. Home Economics & Lange.
Research Journal, 10, 212-222.

http://www.americanscience.org/journals 5 editor@americanscience.org.
 Journal of American Science, 2011;7(2) http://www.americanscience.org

Godwin, & Carroll, D. D. (1986). Financial Pratt, L. (1976). Family structure and effective health
management attitudes and behaviour of behavior: The energized family. Boston:
husbands and wives. Journal of Consumer Houghton Mitl1in Company.
Studies and Home Economics, 10, 77-96. Rosenfield, S., & Neese-Todd, S. (1993). Elements of a
Goldsmith, E. (1996). Resource Management for psycho-social clubhouse program associated
Individuals and Families. Florida State with a satisfying quality of life. Hospital and
university: West Publishing Company. USA. Community Psychiatry, 44(1), 76- 78.
St. Paul. Schnittgrund, K. P., & Baker, G. (1983). Financial
Hallman, H. (1990). Kotitalouden toiminnan management of low-income urban families.
analyyttiset kuvausjärjestelmät. Helsingin Journal of Consumer Studies and Home
yliopisto. Kodin taloustieteen julkaisuja Economics, 7, 261-270.
(English summary.), 1, 61. Schnittgrund, K. P., & Baker, G. (1983). Financial
Home Science management oflow income urban families.
(2010 )http://www.nios.ac.in/srsec321newE/3 Journal of Consumer Studies and Home
21-E-Lesson-10.pdf Economics, 7, 261-270.
Jeries, N., & Allen, C. M. (1991). Wives' satisfaction Varcoe, K. P., & Wright, J. (1989). Resource
with financial management of their families. management education: Measuring impact in
Papers of the Western Region Home different settings. Papers of the Western
Management Family Economics Educators, 6, Region Home Management Family Economics
47- 53. Educators, 4, 27- 33.
Mullis, R., J, & Schnittgrund, K. P. (1982). Budget Wagner, J., & Hanna, S. (1983). The effectiveness of
behavior: Variance over the life cycle of low family life cycle variables in consumer
income families. Journal of Consumer Studies expenditure. research. Journal of Consumer
and Home Economics, 6, 113-120. Research, 10, 281-291.
Paolucci, B., Hall, O. A., & Axinn, N. (1977). Family Walker, E. S., Tremblay, K. R., & Parkhurst, A. M.
Decision Making: An Ecosystem Approach. (1984). Financial management and family life.
New York: John Wiley & Sons. Family strengths 5: Continuity and diversity:
Phlips, L. (1983). Applied Consumption Analysis (rev. Newton, MA. Educational Development
ed.). New York: North Holland. Center.
Prais, S. J., & Houthakker, H. S. (1971). The Analysis
of Family Budgets (2nd ed.). Cambridge, MA:
The University Press.

10/11/2010

http://www.americanscience.org/journals 6 editor@americanscience.org.