A mortgage on real estate owned may appear in Liabilities or may show in Assets, being deducted from the money value of the property before this is listed. It makes no difference which method is chosen. If it appears separately the state of the family finances is given in greater detail; if it is shown only by the value assigned the property, the list is more compact.

Then arises the question of the period of time for which the budget should be made. Many think it easier to begin with a short period - three months, let us say, or even a single month. But this is a discouraging method. Such items as rent, food and telephone run on from month to month with the same, or approximately the same, expenditure. But clothing means usually a large amount in one month, almost none in another. Coal is bought usually to best advantage in large amounts often the year's supply at one time. Insurance is normally paid in a yearly or two semi-yearly payments. Those who budget from month to month may easily be discouraged by the heavy charges of one month out of the twelve. The family income is thought of to best advantage in terms of a year, and the budget should be made for the full year. The calendar year is the easiest to choose, in many ways, though for those who are on salary and whose appointments range from July 1 or September 1 there may be an advantage in making the budget year start from that date, especially if the income is very small. Salaried people always hope for a "raise," and if the budget is for January-December and the larger salary begins in September, then there is a delightful surplus - any surplus is delightful, however small! - for the last four months of the year. A budget that goes into effect January 1 is undoubtedly best for most people.

The budget should be begun at least several weeks before it is to go into effect. The first session must have a good, long, free evening - or a free Sunday afternoon - given to it. Details can be considered and discussed in odd moments after the general outline is made, and one more session of at least an hour is needed to put the budget into final shape. How much time a given family or individual needs must depend on the definiteness of their desires, the clearness of their thinking and their general judgment; but the minimum is the time mentioned above. The budget is too important to be done in a hurried spare hour or two.

Before beginning it is well to have on hand the form to be used in the budget and accounts. This may be adopted later - at any time before the budget goes into effect - but time is saved if the cards, leaves or books are ready. The discussion as to the best form is given at the beginning of Chapter VII. Many families on small incomes have worked the budget by an envelope or box system, distributing into these as weekly or monthly money comes in the share allotted to each heading. This is real budgeting, but it is not satisfactory without the long plan just discussed. Moreover, it leads to inconvenience in borrowing between envelopes or boxes, and it makes impossible the convenience of the checking bank account. If detailed accounts are not kept - and if they are, there is no special point in the system - the details of expenditure escape record and are therefore not available in planning future expenditure. The "system" is better than none, but it will hardly content for long the intelligent user of money.

When the solemn first session on the budget begins, the first thing to be faced is the income. To those whose income is from salary, from an allowance, or from investments paying dividends regularly (like Government bonds), the question is simple. The income is known in advance. For those whose income is derived from investments not sure to pay regularly, such as industrial stocks, it is always the part of wisdom to set aside for Savings some part of the income each year, to be used in the years when the dividends are passed or lessened. Those who are in business or professional work for themselves or who receive part or all their income from commissions are only too often disheartened in making a budget because they cannot count on a definite income. But this group, especially when the income is received in irregular amounts and not at stated times, need the budget far more than those whose weekly pay envelope or monthly check is steadily of the same amount. Their income should be reckoned as the sum on which they can safely count, not as the sum they hope to receive this year. If they can safely count on $3,000 and hope for $5,000, the budget should be relentlessly made for $3,000. Then after three months or six months, if the extra $500 or $1,000 has come in, they can revise the budget, counting only on what has been received, not on the possible extra money of the next similar period. In other words, their only safety is to plan so that they can live on the minimum, using any surplus only after it is received as actual cash. Mortgaging the future is a dangerous business, unless of course it is done with good judgment in the interests of future gain. The expected income should be carefully recorded on the form chosen.

Now comes the very important question of the form of the budget. How detailed should it be? Many who advocate the budget advise beginners to make very general headings, on the ground that classification is a difficult art. It is, and for that reason chiefly this book advocates strongly a very detailed list of headings, since with such a list the classification of the great mass of items requires no thought at all. To illustrate this point, let us consider the general headings frequently advised.

Where does the dentist's bill go? You will be told in Higher Life - horrible thought! - because health is included there. Where does the new side-board go? In Operating Expenses, or in Shelter? Where do you charge the cost of the railway trip to grandmother's funeral? Miscellaneous? What does Miscellaneous mean, anyway, in cost accounting? Or Sundries, or Minor Expenses, or Personal Expenses? How can you control the expenditure under such a grab-bag heading?

But look at the detailed list suggested here. No one family, in all probability, would ever need all these headings, and many a family must add one or more of its own, but the principle of this is "a heading for every kind of thing and everything under its own heading." The items are arranged alphabetically for convenience in use. The advantage to the family of arranging them in classified order is hard to see: