Budgets And Expenditure Flashcards
What is income
Income is the money, goods, or services that a household receives
What is a budget
Is a plan that matches expected spending with expected income over a period of time
What are three types of income
Regular income- received every month/week ex. Pension, wages
Irregular income- extra occasional income ex. Overtime
A benefit- In - Kind, non- money income. Ex. Company car
What is gross pay
The total income earned
What is net pay
Is the gross pay minus deductions
What are statutory deductions
Deductions that must be taken from a gross wage by law ex. PAYE
What does PAYE stand for
Pay as you earn
What does PRSI stand for
Pay related social insurance
What does USC stand for
Universal social charge
What are voluntary deductions
These are sums of money taken from a gross wage at the instruction of the employee ex. Health insurance or charity
What is a wage slip
This is a written explanation of the calculation of an employee’s net pay
What is expenditure
Expenditure is spending on goods and services we use such as television, food and clothes.
What is the financial cost of an item
The price paid for that item
What is the opportunity cost of an item
Is the item you must do without when you have to make a choice between the purchases of two different items
What is a false economy
This is when you spend money on something that at first appears to save you money but in the long run costs more. Ex. Cheap pencil case breaks you have to buy a new one.
What is impulse buying
This is when you buy something on the spur of the moment because it seems attractive at the time
What are the three types of expenditure
Fixed- a regular amount and does not change and is not dependent on usage ex. Mortgage
Irregular- spending amount can change depending on usage ex. Electricity
Discretionary- is spending on items you don’t need but would like to buy ex. Cinema
Why is it important to prepare a budget
To estimate if there will be a period of deficit and how to finance and plan for it.
To see if you are going to live within your means by comparing planned income to planned expenditure
To project the closing cash for each month
Advice on how to improve a budget
Shop around when purchasing goods/services to save money with good deals
Reduce discretionary expenditure
Invest savings wisely
Exaplin job share
Working part time while sharing your job with another worker. This means take home pay will decrease
