One of the practices that a family can embrace to help them attain financial security and long term stability is household budgeting. Although budgeting is a significant exercise, it is always misinterpreted to look like a restrictive or awkward process that takes out pleasure in life. As a matter of fact, budgeting is a process of acquisition of awareness and control. It is not there to restrain families, but to assist them to make conscious decisions on how they spend their money. Most households work in reaction to the absence of a budget. Bills are paid as they come, purchases are made when a need or desire comes and saving is done only when there is money left. This reactive style is insecure and mostly results to the perception that money goes away without a trace. This uncertainty is substituted with a budget.

Income is the basis of any household budget. The families need to be aware of the amount of money that enters the house at a certain frequency. This comprises wages, business revenue, freelance revenue and any other sources. Most of the individuals feel like they already have a rough estimate about what their income is but a slight misconception may cause serious planning mistakes. In case the income is overstated, the family ends up making a commitment of expenditures that they will not comfortably finance. Underestimation of income can cause unnecessary restraint or lack of planning on the part of families. Financial awareness converts financial decision making into informed decision and not guesswork.

After knowing the income, it is followed by taking a count of all expenses of the household. There are the fixed and variable expenses. The fixed costs are rent or mortgage payment, utilities and insurance charge, school fees and loan repayments. They are predictable costs to a large extent. Variable costs are groceries, transportation, clothing, personal care, miscellaneous, and entertainment. Variable expenses are also prone to change, are often underestimated. Most families seem to concentrate on big bills and ignore the fact that little things add up in purchases that are made on a daily basis. The patterns are put into perspective through budgeting.

One of the primary reasons why budgeting should be done is the establishment of harmony between wants and needs. Needs are outlays that are necessary to live a basic life, to be safe and healthy. Wants- they are unnecessary but enhance comfort or pleasure. Both categories have value. Wants are not completely removed on the basis of a healthy budget. Rather, it makes sure that the wants are not financed unless the needs and savings are met. Lack of this balance can lead to the families having financial pressure despite having sufficient income.

Budgeting also presents a planned spending. Rather than questioning the availability of money at the moment, families start questioning whether the purchase fits in their plan. This change ensures less impulse purchase and more satisfaction with purchases. Money is used in a deliberate and not in a routine manner.

The other aspect of budgeting that is considered critical is the backing of regular saving. Most of the families strive to save what they can get at the end of the month. Such a strategy hardly works since other costs increase to utilize the income in place. A budget considers saving as an expenditure. Even minor and regular donations create financial stability in the long run. Savings offer insurance against accidents and act as facilitating the future plans.

A household budget turns money into a cause of stress into an instrument of stability, security and growth.