The management of the money affairs of a family is usually the most perplexing part of its domestic problem. Yet, in spite of this fact, the least candid study and thought are given to it. The value of accurate accounts, as well as their necessity, is recognized in the entire business world. Few associations of individuals are organized for any specific purpose without careful regard to the maintenance of the proper relation of income and outgo. The value and importance of this is no less to the housekeeper than to the banker or grocer. The appallingly frequent examples of reckless disregard in this respect, leading to a constantly increasing number of unpaid bills and final ruin, ought to teach the sad lesson of the unthrifty. Yet statisticians tell us that at least one-half of our well-to-do families are seriously handicapped by debt. Along with that fact should be emphasized another - the number of families in which accounts of personal and family expenses are kept is astonishingly small, and in few instances where such records are kept is sufficient study given to them to lead to advance in standard of living from year to year.

In conducting any business it is of the greatest importance (1) to follow the receipts and expenses, (2) to keep a record of investments and (3) to determine at the end of the year, or shorter period, the results of the business and the exact condition of the capital. The modern household is an intricate business concern. Its financial administration demands as perfect exactness, order and method as any other, if it is to attain in any degree its possible efficiency. Such exactness alone renders the accounts of any real worth. They may be made of priceless value in directing the activities and ministering to the comfort of all in the home.

The question who shall be head bookkeeper and director of the household expenditures will probably be best decided by determining which grown member of the family has a genius for accounts. It naturally falls to the housekeeper as the one who can manage best and has the most intimate acquaintance with the entire situation. In any case, it should be one who loves it or who sees in it possibilities large enough to create a willingness to give the necessary thought and time to make it a success. It has been made a profitable and interesting business training in some families for growing boys and girls. Possibly promotion from the keeping of their own personal accounts to those of the household might be made an excellent stimulus. With a clear, convenient system, adapted to the needs of the particular records to be kept, and with a business-like promptness in entering each night the transactions of the day while fresh in mind, what is often looked upon as a perplexing hardship may become an interesting study. A helpful aid to memory is a card neatly fitted into the purse, upon which sufficient entry may be made at the time of the expenditure to assist in recalling the details when they are wanted for entering in the account. A shopping list filled out with prices as one purchases is a useful aid to memory.

The system employed in keeping the accounts may be very simple. The only necessary requirement is that it be sufficiently complete to record in concise, available form the necessary facts to indicate clearly the details of income and outgo. It must be possible to compare these two sides of the account at any time in order to prove that the balance as shown by the account corresponds with the cash on hand.

Various systems have been devised and successfully used. The efficiency of anyone depends quite as much, perhaps, upon the thorough, painstaking effort of the user to bring it to its utmost point of efficiency and utility as upon the system itself.

Some find a series of envelopes a very convenient form of keeping the records. Each envelope is labeled with the name of the particular division of the expenses which it is to hold. After it has been decided what proportion shall be spent for each division the sum is put into its envelope, to be drawn as needed.

A slip of paper or card in the envelope records each addition, and the expenditures from that envelope during the week or month, or a cash account is also kept of the household expenses and personal account. Any division like the following may be made with the envelopes:

Suppose a family consisting of a man and wife live in a steam-heated flat and have an income of $30 a week. The following divisions might be made each week:

For amusements there may be a separate envelope, or, as there are four months in which there will be five payments to the envelope, these extra four payments may be used for amusements in connection with household expenses.

A system like this has the advantage of keeping always before one just what is at hand to draw from. The leading disadvantages over other methods is its cumbrousness. It involves the keeping of a considerable amount of money on hand and also presents a great temptation to borrow from one envelope to another for making change, etc., which is likely to lead to confusion of accounts.

Example

Advantage and Disadvantages

If the records for the envelopes were kept on cards, these might be filed in a card index for comparison and permanent reference as explained later.

On the whole, a system by which the accounts are finally entered in books intended for that purpose proves most satisfactory. Such books may be procured already ruled for entries, or a blank book can easily be ruled as desired. For a complete record the same books are useful as for other accountants - a journal, ledger and balance sheet. The journal and ledger may well be combined in one book, as will be explained in connection with Table III.

The household account records exchanges whereby the housewife buys the goods or services which her household needs, giving in exchange of her means. The simplest statement of such exchanges is made in a journal. A single page is used to enter both receipts and expenses. Thus: