Household Income
What is income?
Income is the money received by a person or a household.
What is expenditure?
Expenditure refers to the way people spend their income tosatisfy various needs and wants.
What is a budget?
A budget is a financial plan for expected future income andexpenditure.
Why do household prepare a budget?
Live within their means, think about their spending, plan for large items, think about how much money they have left over, see months where they have a lot of bills etc.
One example of a statutory deduction?
List three sources of household income
Pension, Wage, Salary, Jobseekers, Child Benefit, grant, Interest on saving, Windfall
Name the three different types of expenditure
Fixed expenditure
Irregular expenditure
Discretionary expenditure
What is opportunity cost? give an example
Before spending, consider what else you can buy or do with your money, e.g. saving.
What is a budget surplus?
A budget surplus occurs when income is greater thanexpenditure.
What is minimum wage?
The lowest hourly rate an employer must payan employee by law.
What does BIK stand for and explain it.
Benefit in kind, Non-money income, also known as ‘perks’, may be received when the household is provided with goods or services that have a money value,e.g. a company car.
What is Irregular Expenditure with an example?
Irregular expenditure is spending where the amounts involved change with usage, e.g. groceries, light and heat, car fuel.
What is impulse buying?
Avoid unplanned 'spur of the moment' spending, especially on non-essential/expensive items.
What is a budget deficit?
A budget deficit occurs when income is less thanexpenditure.
What is disposable income?
The income left after all taxes have been paid is called disposable income.
One example of regular and irregular income.
Examples of regular income: Wages, Salaries, Child Benefit, Pensions, Jobseeker’s Benefit.
Examples of irregular income: Overtime, Bonus, Windfall income.
Name two guidelines to effective shopping?
Prepare a budget/ Prioritise expenditure/ Avoid impulse buying/ Beware of false economies/ Consider opportunity cost/ Check bills, invoices and interest rates.
What is a false economy?
A false economy is a purchase that appears to be goodvalue for money at first, but in the longer term turns out tobe more expensive or poor value for money.
How do you calculate net cash?
Total Income - Total Expenditure
Formula for net pay?
Net pay = Gross pay − Total deductions
What is the difference between a wage and a salary?
A salary is a fixed regular payment that doesn’t change with hours worked, while a wage is pay based on the number of hours or work completed.
What is current vs capital expenditure?
Current expenditure is repeated or ongoing short-terms pending, e.g. groceries, rent, fuel costs.
Capital expenditure is once-off or long-term spending, e.g. buying a new car or furniture.
Name two solutions to overspending?
Cut back on spending./ Postpone non-essential spending./ Spread large payments over a longer period of time./ Use savings or surplus money from previous months./ Generate extra income/ Borrow money.
Two ways to deal with a budget surplus?
Save or invest it until it is needed.
Use it to repay a loan.
Use it to fund some extra expenditure.
Name 4 out of the 5 ways a wage can be calculated?
Overtime, Bonus, Piece rate, time rate, commission.