Budget

Question 1

Budget

Answer 1

Budget is a financial plan that sets out expected future income and expenditure.

It is an estimate of future income and expenditure

Question 2

Reasons to Prepare a Budget?

Answer 2

Helps a household to live within their means i.e. the limit for the month’s spending

Encourages people to think about their spending i.e. consider the type, timing and amount

Allows people to plan and save for large items of future expenditure e.g. new car, holidays, wedding

Identify months where there are a lot of bills and expenses. People can spread out payments of borrow if necessary

Question 3

Net Cash

Answer 3

This is the difference between planned income and planned expenditure in any given period of time.

Question 4

Opening Cash

Answer 4

The amount of money the household has (or plans to have) at the START of the month.

Question 5

Closing Cash

Answer 5

The amount of money the household has (or plans to have) at the END of the month.

Question 6

Balanced Budget

Answer 6

occurs when income exactly equals expenditure

Question 7

Budget Surplus

Answer 7

occurs when income is greater than expenditure

Question 8

Budget Deficit

Answer 8

occurs when expenditure is greater than income

Question 9

How to deal with a Budget Deficit?

Answer 9

Increase Income: Take on extra income ( e.g. overtime/ another part time job)

Decrease Expenditure

Avail of Credit