A Family Budget When Income Is Irregular and Arguments Replace Planning
The Naik family of five lives in Hubballi. The father is a daily-wage electrician earning ₹28,000 in a good month but nothing when it rains; the mother earns ₹4,000 by tailoring at home. Fixed costs are rent ₹7,000, school fees ₹3,000 due next week, loan EMI ₹4,500, electricity ₹1,200, and transport ₹1,500. Last month they spent ₹9,000 on food, ₹2,500 on a birthday party, and ₹3,000 on 'buy one, get one' shoes. They have ₹1,200 in savings and no health insurance. The elder son needs ₹2,500 for a school trip; the father wants a new smartphone on EMI; the mother wants a sewing machine on instalments to take more orders. The gas cylinder is nearly empty. Money is discussed only when there is an argument. Their total monthly income is therefore ₹32,000 in a good month and ₹4,000 in a bad one.
1. Identify the family's resources and the main management problem. Apply the steps of management to show how the argument can be turned into a plan.
Read the worked answer
Resources: human-father's electrical skill, mother's tailoring skill, children's time, family health; non-human-₹32,000 income in a good month, sewing machine, house, savings ₹1,200, borrowing capacity; community-SHG, neighbours, school. The main problem is not simply low income but lack of planning and control: irregular income, impulse spending (₹2,500 party, ₹3,000 BOGO shoes), no emergency fund or insurance, and decisions made only during arguments. Management steps: (1) identify the problem and goals-pay fees, keep gas, build a buffer; (2) plan-list fixed and flexible expenses, use a written monthly budget based on the lower income; (3) organise-divide roles, keep bills in one folder, use envelopes/jars for food and transport; (4) implement-track daily spending; (5) control/evaluate-compare actual with plan weekly and adjust. Because income is irregular, budget on ₹32,000 but keep a priority list for a ₹4,000 month. This turns an argument into shared decisions with criteria.
2. Prepare a monthly budget for a good month of ₹32,000 that covers essentials, starts an emergency fund, and moves toward one goal. Justify two trade-offs.
Read the worked answer
Budget: rent ₹7,000; food ₹8,000; school fees ₹3,000; loan EMI ₹4,500; electricity ₹1,000; transport ₹1,200; gas ₹900; health/medical ₹500; clothing ₹500; emergency fund ₹1,500; son's trip ₹1,000; mother's machine fund ₹1,000; miscellaneous/buffer ₹1,900. Total ₹32,000. Reasoning: essentials and the fee come first; the EMI cannot be skipped without penalty. Trade-offs: (1) the birthday party and BOGO shoes were discretionary-limiting such spending to ₹500–700 releases money for the emergency fund, which is more important than a one-day event because a health or repair shock would force borrowing. (2) The father's smartphone on EMI is postponed this month; the mother's sewing machine fund gets ₹1,000 because it can raise income, but the purchase waits until at least ₹4,000–5,000 is saved or a low-interest source is compared. The son's trip gets ₹1,000 now; the family asks the school for a payment plan rather than borrowing. The buffer is not 'extra'-it absorbs the next power cut or price rise.
3. The father wants a new smartphone on EMI, the mother wants a sewing machine on instalments, and the son wants ₹2,500 for a trip. Using opportunity cost and priority criteria, advise the family.
Read the worked answer
Use criteria: Is it necessary? Does it earn income? What is the true cost including interest? What is sacrificed? Smartphone: a want, not a need; EMI adds a fixed commitment and interest, and a phone depreciates. If the old phone works, postpone; if a phone is needed for work calls, buy a basic handset from savings, not EMI. Sewing machine: a productive asset-it can raise the mother's ₹4,000 earning-so it ranks higher, but compare instalment interest with an SHG loan or waiting two to three months; buy only after a trial order exists. Son's trip: educational but discretionary; ₹2,500 equals nearly the emergency fund. Ask the school for a shorter/cheaper option or pay ₹1,000 now. Opportunity cost: every ₹1,000 committed to EMI is ₹1,000 not available for food buffer, insurance, or the machine. Sequence: fees and gas → emergency fund → machine → trip → smartphone. This is a judgement, not a rule; if the trip is once-in-a-school-life and the fee is safe, a partial compromise is reasonable.