Financial Planning: How to Plan Your Finances for the Future

Budget Deficit for the Constantine Family 

As the word “deficit” suggest in the budget, it occurs where the expenses or usage costs exceed the income or earning ( Roberts, 2016). Looking at the Constantine family budget, there are some situations that may have resulted in a deficit balance. First, lighting expenses may have increased from leaving the lights on for long hours. Second, the expenses incurred in food and drinks which may result from eating out a little more than the normal family consumption level. Also, buying some foodstuffs such as groceries that were not needed for their diet. Third, spending on clothing may also have raised family expenses. The family may have purchased single or two more clothing article that was not necessary for the house. Lastly, buying gifts that are expensive than normal caused the deficit. In general, most of the cost allocated in the budget can be easily reduced by alternative use of facilities and substitution. Also, curtailment of cost activities is possible. The major cause of this family budget deficit is improper planning and control. For instance, it is financially “unwise” for the family to make donations with the funds that are technically not available.

Family Budget Amounts Suggestion 

To Constantine's family budget, I would make the following changes suggestions which will simultaneously reduce unnecessary expenses and increase their savings

Budget Suggestion Hints: When making a family home budget, it is important to have a good understanding of the income as it is "your take-home-pay" that funds the household budget ( Gould et al. 2015) . With this, it will technically impossible to create expenses which money to funds is not available. The Constantine family budget, it is the current income (base pay, bonuses, and incentives) that necessarily pay for their household expenses.

Constantine Family Budget’s Additional Actions 

Kapoor and Dlabay et al. (1994) argues that some of the family budget expenses can be termed as variable costs and thus, they can be negotiated for lower costs. For instance, internet and cable cost, the family can negotiate with the provisions for a "friendly" (better) plan or rate. Altogether, it is possible for the family to stay without a cable connection. By opting out this internet utility, the overall bill will reduce by $60 depending with their provider and location. Furthermore, the family can continue billing for this utility but limit their use if the cost is based on the consumption rates. In food spending, the family can change their consumption patterns. For example, committing to take sack lunches from home and thus, eliminate the food (away) costs completely. Alternatively, each member of the family could have a set of the budgeted amount for personal uses. However, the amount that every member agrees upon.

In addition, as part of money management activity, the family may opt to set goals for their money. The goals should focus on both primary and secondary spending. Primary spending is comprised of the basic needs such as food, clothing, and shelter whereas the secondary spending includes all those activities that the family may survive without. Some examples of the latter include gifts and retreats. The budget goal will likely be achieved it is shared amongst all family members. This will avoid cases where for instance, one spouse is spending whereas the other one making all the effort to save.

In general, the Constantine family need to consider some of the costs incurred on the facilities that are not necessary.

References

Gould, E., Cooke, T., Davis, A., & Kimball, W. (2015). Economic Policy Institute 2015 family budget calculator: Technical Documentation. Economic Policy Institute, Working Paper , (299). 

Kapoor, J. R., Dlabay, L. R., & Hughes, R. J. (1994).  Personal finance . Irwin. 

Roberts, E. (2016). Household budget studies in the British dominions, 1873-1939.  Rivista di Storia economic ,  32 (2), 249-268.