Chapter 1: Income and Expenditure Flashcards
Income
Money or something of value received by a person or household. Income can be regular or irregular.
Regular Income
Money that is received every week or month. You can predict how much you will earn and depend on it.
Examples of Regular Income (6)
- Wages
- Salaries
- Unemployment Benefit
- Child Benefit
- Pensions
- Pocket Money
Wages
Weekly or monthly payment given to an employee in return for work.
Unemployment Benefit
Weekly payment made to people who are seeking work but unable to find work.
Child Benefit
Monthly payment by the state (government) paid to parents of children aged 18 years and under while they are still in full time education.
Pensions
Weekly payment to people who are over the age of 65 and retired from work.
Irregular Income
Money that is received from time to time. Often, you do not know how much or when you will receive the money. You cannot depend on it.
Examples of Irregular Income (5)
- Overtime Payments
- Commission
- Bonus Payments
- Gifts
- Interest
Overtime
Working more hours than normal. It is usually paid at a higher rate than regular income.
Bonus
An extra sum of money that may be paid to a worker if they reach an agreed target.
Commission
A salesperson is given a percentage of the selling price to encourage him/her to sell. The more they sell the more they earn. e.g. 15% of the selling price.
Interest
This is money earned from investing your money. E.g. giving a business man €1000 to start a business and he will pay you back €1000 plus 2% (€1020).
Benefit-in-Kind (BIK)
A non-financial (money) reward. Some employees receive payment in the form of goods and services.
Examples of BIK (5)
- Health Insurance
- Company Car
- Discounted / Free Meals
- Discounted Travel
- Discounts on goods
Expenditure
The amount of money that we spend over a particular period of time. Spending can be fixed, irregular or discretionary.
Fixed Expenditure
This is a set amount of money that must be paid on a regular basis. Same amount, Same time. Example: Mortgage.
Irregular Expenditure
The amount and timing of this type of spending changes on a regular basis and will depend on how much or how little we use. Example: Electricity.
Discretionary Expenditure
‘Fun spending’ this is money that is spent on non-essential items and should only be spent after fixed and irregular items have been paid for. Example: Cinema.
Current Expenditure
Spending money on day-to-day items that get used up within one year and only provide a benefit for a short period of time.
Examples: Food (groceries), light and heat.
Capital Expenditure
Spending money on items that will provide a benefit for longer than one year and will provide benefit for a long time.
Examples: car, washing machine.
