Family Cash‐Flow Budgeting

A budget process variable is developed to address three research questions con cerning family cash‐flow management: (1) how frequently is the formalized cash‐ flow budget used, (2) what are the characteristics of those families who tend to use it, and (3) what are the potential benefits associated with the use of a formal budget. The distribution for a formalized budget variable is reported for a repre sentative sample of Iowa families. The distribution is skewed with a dispropor tional large group of households reporting little, if any, formalized planning. Compared to informal planners, formal budget planners are more likely to have the following characteristics: younger, more years of education, two‐spouse households, and high circumstantial demands. Preliminary evidence suggests that benefits like increased wealth accumulation over the long run may be more important than immediate benefits like current satisfactions. A question is raised about the conventional assumption that families typically use a formalized or “normative” budget process.