16 MANAGING FAMILY INCOME || NIOS-SECONDARY COURSE || HOME SCIENCE-216 CLASS X

Chapter-16

MANAGING FAMILY INCOME

INTEXT QUESTIONS 16.1

1. Choose the correct option from the choices given to complete the statement.
a. Income means
i money
ii house
iii furniture
iv all the above.
 Ans: All the above.
b. Family income means
i income of all related persons living in the household
ii commodities and services produced in the country
iii right to consume goods and services
iv all the above.
Ans: Income of all related persons living in the household.

INTEXT QUESTIONS 16.2

Fill in the table drawn below by writing the budget head against each expenditure. The first item has been done for you.
 Ans:(i) house  (ii) medical expenses (iii) transport (iv) entertainment (v) household      (vi) education (vii) public utility (viii) public utility.

INTEXT QUESTIONS 16.3

1. Write T for true and F for false in the space provided before each statement. If false, write the correct answer in the line given below each question.

a. _________Budget is the process of allocating income among various uses.
_______________________________________________________
b. _________ Family goals affect the budget.
_______________________________________________________
c. _________A budget forces you to decide what is more important than the other.
_______________________________________________________
d. _________A budget can’t help in achieving long term goals.
_______________________________________________________
e. _________Budgeting helps in the management of your finance.
_______________________________________________________
f. _________ The main purpose of a budget is to allow you to live within your income.
_______________________________________________________
g. _________Income of the family member does not influence the budget.
_______________________________________________________
h. _________Making a budget helps in saving money.
_______________________________________________________
i. _________ Major amount from the income is spent on food.
_______________________________________________________

Ans:a. True
        b. True
        c. True
        d. False - A budget can help in achieving long                    term goals 
        e. True
        f. True 
        g. False - Income of family members influences                 the budget  
       h. True
       a. He was concerned about other people/friends.

TERMINAL QUESTIONS

1. Define any two of the following:
a. Money Income.
b. Direct and Indirect Income.
c. Budget.
Ans:(a)Money Income: Whatever is earned in the form of money which comes into the family is the money income.

(b) Direct and Indirect Income: Direct income includes the salary from a job, part time classes, rent from a house or shop, interest received from bank or sale of shares and other investment.
When we use our skills like stitching clothes for family or growing vegetables at home for our consumption or knitting sweaters for family members, we have indirect income. Although we do not get any money in hand yet at the same time we save money which we would have given to the tailor for stitching or buying a sweater or vegetable etc.
(c) Budget: A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for a person, a group of people, a business, a government, or just about anything else that makes and spends money.

2. Give any five points highlighting the importance of ‘Family Spending Plan’.
Ans: Use the following steps to make your spending plan:

i. Keep in mind all the income and facilities available to you for the period for which you are making the spending plan.
 
ii. List all the requirements (commodities and services) needed by the family members for that period.
 
iii. Prioritize these needs.
 
iv. Allocate funds keeping in mind the total income. This will help in effective utilization of money and other resources.
 
v. Balance the spending plan. This will also help to save some money.
 
Second step is listing all the requirements (main category). All families have their own spending plan according to their needs.


3. List the characteristics of a good budget.
Ans:The characteristics of a good budget are:

a. Accurate estimates of income: Find the exact amount of income that will be available to you for expenditure. (Gross income of the family differs from its take home pay).
 
b. Accurate estimates of expenditure:  The expenditure estimate should be as accurate as possible. Look up the budget of the previous years or the records of past expenditures and savings.
 
c. Reasonably accurate allocation of money: The resources on expenditures side should be reasonably accurate; the family must be able to determine its present needs and wants and anticipate future changes (e.g. for some families budgeting for October- November will need extra outlay on spending on festivals and other occasions.)
 
d. Flexible: A budget is made flexible by allowing sufficient margin on certain items. It should allow you to divert some money from one item to another as per your need. For example, some money can be easily diverted from entertainment in case of an unexpected high medical expenditure.


4. Request your friends to discuss and plan their family’s spending plan. If they are not willing to do it
• Give two reasons to convince them about the importance of a spending plan.
• Let them develop their spending plans.
• Give suggestions for improving it by supporting with reasons for each flaw in the plan.
Ans:Two reasons which explains the importance of planning budget are listed below -

1. Spending plan helps an individual to keep him or her away from debts. Or else if anyone is in debt, spending plan will help that person to pay the debts.

2. It will make certain that an individual will have enough money needed for his or her requirements.

5. Define the term “spending plan” and explain the factors on which the allocation of money on different items is decided.
Ans:A spending plan is a planned approach to spend money. It is based on the total income of a family. It helps the family to live within their income and also save money for future needs and emergencies.

  • Income- The total family income from all sources will basically help to decide how much can be spent on various items. More the income more will be the money spent for purchasing different items.
  • Size of family- More the number of family members more will be the expenditure on food and clothing. Hence, the family will be able to spend less on entertainment and luxuries etc.
  • Age of family members- If there are school going children, expenditure on education, school uniform, stationary etc. will be more.
  • Place of residence- In big cities like Delhi and Mumbai, cost of living, food, house rent, travel expenses and school fee are higher than in small towns and villages.
  • Skills- If some family members have certain skills like making preserves or doing household repairs like repairing electrical equipment, carpentry etc. then the family will have to spend less on getting the repairs done.
  • Savings- Keeping in mind the future needs.

6. Make a simple spending plan for the following families:
a) A family of four consisting of the parents and two children aged 12 and 17 years. They live in a rented house in Delhi. The father gets a salary of Rs 5,000.
b) A family of six, grandparents, parents and two school going children 8 years and 12 years old. They live in a village and have a small farm which brings them an income of Rs 3,000. The school in the village does not charge any fees from its students.
Ans:


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