Finance assignment 2 Example | Topics and Well Written Essays - 500 words

Finance 2 - Assignment Example This can be attributed to the fact that the level of inflation continues to surge making the expense very high. At the same time, it can be seen that other charges line the bank and interest charges can be high when accumulated. Most households who fail to include them in the budget risk failing experiencing budget crisis. Moreover, it is clear that expenditures on entertainment and on social things are also very high if accumulated. From the budget, the expenses made on tours, entertainment is summed is almost equivalent to the amount incurred on the essential goods (Chiuri, 2000). Preparing a budget is completely different from following the budget estimates. Most households who prepare budgets fail to completely adhere to their set budgets. This is because most households engage in impulse expenditures (Weston, n.d.). Moreover, the unpredictable changes in prices of the foods and other conditions have made it difficult to follow the budgets. Moreover, following this budget require finance discipline, which is normally a major problem to the households. Most households are unable to forecast on the expected changes in economic environment or may fail to spread their budgets throughout the budget period. In most cases, households tent to spend heavily immediately after receiving cash than towards the last quarter of the budget period. Career change or further education might have a big impact on the budget. First, a change in career could enable an individual acquire additional knowledge on budget preparation or it could result in a change in the social class. For instance, a household who shift to study economics may learn on the need to increase savings or invest hence change the budget expenditure. At the same time, advancement in the level of education may result in a change in the social class (Pate & McKee, 2010). Such a change is accompanied by a change in the consumption pattern or a change in the