There are two basic consumer budgets: the individual budget and the household budget. Both involve administrative requirements: short and long term forecasts for expenses and income, and tracking all spending to ensure they are adhering to the agreed to budget.
Planning guides and software programs are available to simply the administrative process and increase the likeliness for financial success.
Differentiating needs from wants is a requirement for both budgets as well. It involves categorizing what purchases the consumer or household can’t do without, such as food, because they need it. And what purchases the consumer or household can do without, such as a gaming system, because they want it.
Both the individual and household budget require participants to make allotments for saving requirements, which is the amount of money they planned to regularly deposit either for future purchases or unexpected expenses. In addition, both budgets require adjustments be made for disposable income; the money that is left over after the bills have been paid and the savings requirements met.
Making the most of each budget requires financial discipline, effective record keeping and communication skills. Every member in the household has their own simple individual budget, and collectively they make up a more complicated household budget; they’re components of microeconomics – the financial behaviors of consumers.