BUDGET, FAMILY. For the control of family expenditure (and for individual expenditure as well) the budget is coming more and more into use. A budget is a plan for the use of a given amount of money, a plan made under specific headings. Accounts are kept under the same headings, so that the budget plan can be constantly checked, and unless they are so kept, the budget becomes useless. On the other hand, household accounts have little value unless they are so kept as to make them the basis for planning future expenditure.
Attention was first called to the subject in the United States by Ellen H. Richards in The Cost of Living (1899). Statistics of family expenditure have been collected by Government depart ments, by economists and by welfare societies. These have been chiefly for low income levels and have been used in consideration of the minimum wage, the . "decency level" and the "comfort level" for wage earning and dependent families. Some data have been collected regarding the use of larger incomes, but not to the same extent as for the low incomes. "Model" or "ideal" budgets for given incomes have been issued from many sources, to be used as a basis only, since the budget must be an individual matter with each family. Dr. Ernst Engel in 1857 enunciated his "laws" for the budget, stating that in the wage earner's family as the income increases the percentage spent on food decreases, while the per centages spent on clothing, housing and general operating expense change very little. F. H. Streightoff in The Standard of Living (1911) has re-stated these laws for American conditions. There seems to be a general agreement that rent should not exceed 25% of the income, that clothing should not exceed 15 % or 20%, and that savings must be at least io% for safety. The savings possibil ities must vary with family conditions, io% being impossible to many with low incomes and large families, while 5o% is quite possible to others; io% provides for emergencies, but would rarely be enough to produce an old age income.
The United States Treasury department, during and after the World War of 1914-18, did much to promote the use of the family budget. The bureau of home economics of the United States department of agriculture is still carrying on this work. Many of the mutual savings banks have established a "home bureau," the head of which acts as budget consultant. A few department stores have done the same, and some newspapers and women's magazines are running special budget departments. The national thrift com mittee has a sub-committee on the subject, and presents the budget all the year round as one of its seven points of thrift.
The purpose of the budget is to enable the family, by taking a long look ahead, to decide how it wishes to use the income avail able. It is seldom advisable to make it for a shorter period than a year. A plan, properly checked by accounts, ensures wiser ex penditure than is possible in day-to-day spending without a plan. The family budget is made by husband and wife together, as senior partners, or by other heads of a family. Older children are often called into counsel as junior partners. The large items of rent, food and clothing are first considered, then other headings in detail. Good budget-making allows no miscellaneous or sundries heading, as the object is to control expenditure, and such headings are not easily controlled. Allowances for personal expense are usually made to some members of the family, including children old enough to keep accounts. In good budget-making it is always stated definitely what such an allowance must cover. In the family accounts only the amount of the allowance as paid is recorded, but certainly for children a simple budget and accounts should be required. For the expenditure under each of the headings some member of the family is responsible. In the average family, the wife controls the spending under most of the headings, and it is her part not only to keep the accounts carefully, but also to use the money as wisely as possible.
Different budget headings are recommended by different ad visers, and many printed forms of accounts are distributed by banks, insurance companies and others. The family should choose with care the form best suited to its needs. Since unexpected expenses may occur at any time, readjustment of the budget plan must of ten be made. If one heading calls for more money, another or others must have less, and which shall lose must be considered. The budget should never be looked on as an iron-bound restriction of expenditure, but rather as a plan that can at any moment be changed to fit changing needs.
One important purpose of the budget is to secure regular savings (of the amount possible to the family), which are difficult to make if the income is not carefully apportioned. The savings bank may be used for an emergency fund or for funds for special pur poses of the near future. The budget makers study savings and investments, with the purpose to be served by each; whether the home shall be owned or rented; whether the family should make investments on which they can realize quickly in case of need, or may choose long-time investments to produce an old age income. Life insurance in its many forms must be studied, so that any policy taken fits the need which it will be or may be called on to meet. The careful consideration brought about by the use of the budget tends to ensure safe investments. When the husband and wife consider these together, the latter learns to judge of safety and advisability for herself, so that if she should be left with the responsibility, she is not at the mercy of her advisers. The family assets and liabilities are reckoned at the end of each budget year, and the gradual growth of the net assets is both a reward and a stimulus.
The advocates of the budget believe it to be of the greatest value, not only because by the control of expenditure the family is in safer condition financially, but also because the family ideals are better maintained when a long-time plan is made.