how does the rise in prices affect a household budget?

A household budget is based on two figures. One is the
amount of income for the household, the other is the amount of expenses. Based on the
amount of money that can be predicted to be brought into the household's finances on a
regular basis (salary or wages, tips, dividends from investments, rental payments made
to the household owner, alimony, etc.), the amount of money that can be spent can be
predicted. Fixed expenses (housing payment, utilities, transportation expenses,
insurance, loan payments, etc.) are easier to predict than variable expenses (food
costs, entertainment, clothing costs, etc.), but they all need to be
included.

When the budget is based on certain amounts of
money for certain items and the prices of those items increases, there may not be enough
funds to cover the extra costs. When the costs of food and gasoline and clothing all go
up, adjustments will need to be made to pay those increased amounts. Either the amounts
spent in some other areas will need to be reduced, or the household will need to find
some way to bring in more income.