Technology and Livelihood spending resources among all
sectors to meet national objectives.”
Education 9 – 2nd Quarter o The national budget
____________________________________________ allocates resources, distributes
wealth and income, and
Understanding the Principles of
stabilizes the economy.
Budgeting
What is Budgeting? Importance of Budget
- Budgeting is the process of An essential management tool.
allocating money for different Budgets tells you how much money
purposes or uses. you need to carry out your activities.
Budget enables you to monitor
Principles of Budgeting income and expenditure.
- Know the family’s income. The budget is a basis for financial
- Make a list of expenses. accountability and transparency.
- Classify expenses.
- Compute the amount needed for Steps in Making a Personal / Family Budget
expenses. Total the combined income of the
- Keep records of expenditures family.
- Allocate an amount for some List items of expenditure.
savings. Determine the percentage allocation
for each item.
Why is budgeting important? Compute the percentage allocation
1. Balances your income and for each item of expenditure.
expenditure. Total the amount for all the items.
2. It gives a feeling of comfort and Deduct the total expenditures from
satisfaction. the total income.
3. It enables the family to list down its
needs and wants. Elements of Budget
4. It serves as a training for everyone, Food – The amount of money spent
especially the youth. on food depends on the family size,
5. It is a constant reminder. income, health / nutritional
requirements, etc.
Tips to Effective Budgeting Shelter – This includes house rental,
1. Have a clear appreciation of utilities, maintenance cost or home
spending. improvement, and real estate taxes.
2. Learn to prioritize. Clothing – Covers clothing, shoes,
3. Learn to sacrifice. accessories, and other wardrobe
4. Learn to delay gratification. essentials; depends on personal
Effective management of resources is preferences and the roles/functions
essential in attaining family goals. of the family members (e.g.
Learning how to handle and budget students).
your resources at a very young age Health – Covers the health needs of
prepares you for an important role in the family members, inc. periodic
your adult life. medical and dental checkups and
emergency care.
Preparing the Budget Education – Considered a need
Definition of a Budget even among the poorest of families.
A budget – a financial plan for the
coming period, setting out goals with Other Elements of Budget
the allocation of resources needed Social and Recreational Needs –
for the achievement of those goods. Provisions for social and recreational
The Budget Act, 2001 – defines needs to serve to balance work and
the budget as “The process by which play.
government sets levels to efficiently Transportation and Other
collect revenue and allocate the Miscellaneous Expenses – The
cost transportation today is
becoming more expensive and had
become a real necessity.
Contingency Fund – A small
percentage of the income should be
set aside for needs that may
unexpectedly arise.
Fiscal Discipline and Prudence
Fiscal Discipline – The ability to
effectively manage money and
resources so that it is properly
channeled to meet personal and
family needs.
Fiscal Prudence – The part of the
success of fiscal discipline. Being
prudence means being discrete or
cautious. It is having common sense
and foresight in spending.
Ways of Exercising Fiscal Discipline and
Prudence
1. Be sure you know the definite
amount you receive for your
allowance.
2. Open a saving account.
3. Save loose change.
4. Avoid impulse buying.
5. Keep track of expenses.
6. Pay in cash.
7. Make a list before shopping.
8. Pay your credit bills on time to avoid
penalties and interests.
