Family or domestic economy is that field of study that is interested in the management and administration of scarce resources and of alternative use in homes and communities.
In fact, we can say that it is a part of the economy that analyzes various issues, but with the common factor of home or family. Examples might be household furnishings, including kitchens, crafts, consumer education, child development, hygiene, or individual money management.
The importance of the economy in the family economy
This social science is not only useful in areas such as business, finance or university, it is also useful in daily life. It is essential to know how to manage money, how to manage expenses and income, and know what a checking account or an interest rate is. Therefore, everything you can contribute to this knowledge will always be useful to us.
Therefore, it is important to teach economics education. But not only to university students or vocational training, but also in schools and institutes. But within it, the family economy takes on special relevance, since we apply it in our day-to-day life. From institutions like Economipedia we do our bit.
Characteristics of the family economy
This field of study, within economics, has some characteristics related to its definition and which we show below:
- First, it focuses on family and homes. Of course, households with or without children and of any other kind.
- Their main interest is household expenses and their sources of income. For that, it takes into account the different types of needs such as health, food or hygiene.
- The main objective is to know how the domestic economy should be managed to achieve, on the one hand, the much-needed savings, and on the other, a better quality of life.
The complementary home economics. EDOCO
Some Mexican researchers coined a term "complementary home economics" (EDOCO). This form of family economy consisted of a series of small-scale enterprises, within the family environment, managed by the family itself and that sold goods or provided services (Hernández-von Wobeser and McCoy-Cador, 2017).
In this country, as in many others, there are two ways of understanding this informal economy. The State is in charge of analyzing the possible underground economy and tax fraud. The researcher studies the reasons that lead some households to certain practices to survive. In reality, it is nothing more than a form of subsistence that usually grows at the dawn of economic crises.
Some examples of family finances
Let's see, to finish, some examples of home economics related to the main expenses in the home.
- The "shopping list" is perhaps one of the best known. Of course, at an informal level it refers to what each of us does using the economy. Formally, it is studied, for example, through the CPI or consumer price index. This, in turn, is related to inflation (continuous rise in the CPI) that affects households so much.
- Banking services. These are the order of the day and having certain financial knowledge can help us understand them better. We have all had to ask for a loan, a credit card or have set up an investment fund.
- The education of children. This has no cost in compulsory education, but it is financed via taxes. Sometimes and depending on the country, a not very high fee must be paid if we opt for concerted teaching. However, others such as the university do involve an expense that can be very high.
- Something similar happens with health. In countries where the system is public, it is financed through taxes. In mixed systems (Sweden, Norway) or private (Switzerland, USA) a monthly fee is usually included. This would be similar to what is paid for other benefits such as unemployment or pensions.
As we see, the family economy is very important in our lives. In fact, it is a regular part of them. Therefore, having some basic notions of economics can help us manage ourselves better and improve our finances.