Chapter 2- Personal Income And Expenditure

Question 1

What is income?

Answer 1

Income is money and/or something value that you receive. It may be earned.
Eg. Through paid employment
Social welfare payments

Question 2

Sources of income

Answer 2

Students- Pocket money,babysitting, part time work
Third level students- student grant, part time job, grinds to students
People of working age-salary (monthly payment) and wage ( weekly payment )
Profit ( if they decide to own a business )
Unemployed people ( jobseekers benefits )
Retired people - state pension
Private pension

Question 3

Other forms of income

Answer 3

Retired people -free travel
Unemployed people- free medical care
Student- student discount card
Employee perks - company car, mobile phone,work clothes and private health care.

Question 4

Regular income is when you are certain to receive this income.

Answer 4

~Wage /salary is paid every week/fortnight/month
~Child benefit is paid every 4 weeks to a parent/ guardian of each child under the age of 16
~Jobseeker’s Allowance is paid each week to those who are unable to work.
~Pensions from the state and/or a private pension fund are paid weekly /weekly to retired people.

Question 5

Irregular income is not certain that you will receive this income

Answer 5

Tax refund from the government which will be received only buy someone who paid more tax than they needed too.

Inheritance which will be received only following the death of a relative or friend.

Rent for a room in your house through airbnb which will be received only if and when someone takes up the offer.

Question 6

What is an employee?

Answer 6

An employee is a person who works for an employer ( person who hires them ) in return or a wage or salary.

Question 7

What is a wage?

Answer 7

A wage is paid per hours worked or per product made.

Question 8

What is a salary?

Answer 8

A salary is fixed regardless of time worked.

Question 9

What is time rate?

Answer 9

Tim rate means payment for the time worked (eg, per hour/per day)

Question 10

What is overtime?

Answer 10

Overtime is when you work additional hours and get paid extra per hour.

Question 11

What is commission?

Answer 11

Commission on sales is an incentive to ensure the salesperson sells more.

Question 12

What is a bonus?

Answer 12

Extra income and it is usually awarded for reaching a sales target or meeting a tight deadline.

Question 13

What is profit sharing?

Answer 13

Some businesses give employees a percentage of the company’s profit.

Question 14

What is expenditure?

Answer 14

Expenditure is the amount of money you spend during a a particular time.
Spending should be planned.

Question 15

Tips on planning expenditure

Answer 15

1. Live within your means
2. Save on a regular basis
3. Prioritise your bills
4. Know the timing of bills
5. pay into a pension fund

Question 16

What is fixed expenditure?

Answer 16

Fixed expenditure is money spent at the same time each week,month or year.
Examples: Mortgage,rent,loan repayment,to licence fee.

Question 17

irregular expenditure

Answer 17

With irregular expenditure,the bill may or may not be paid at regular intervals, but the amount paid out varies.The more you use the more you pay.

Examples:Petrols,phone bill,groceries,school supplies

Question 18

What is discretionary expenditure?

Answer 18

The money spent on things we CAN live without (luxuries).

Examples: Sky Tv ,designer clothes,holidays,take-away meals.

Question 19

Opportunity Cost

Answer 19

The item or thing not chosen is the opportunity cost

Example:
If you HAD £2 and you could buy a drink or crisps.
You chose the drink 
Opportunity cost= crisps 
Financial cost = £2

Question 20

What is impulse buying?

Answer 20

Unplanned buying without thinking or planning.

Question 21

What is false economy?

Answer 21

False Economy is an action that seemed as though it would save money,but in the long term it resulted in money being wasted rather than saved.

Question 22

How to make informed decisions?

Answer 22

1. Be aware of your income and spending habits
2. Plan for your income and spending appropriately
3. Become aware of wealth and debt
4. Understand financial costs as well as opportunities forgone

Question 23

What is current expenditure?

Answer 23

Is spending on day to day items that will last for a limited period time only.

Examples: food,coffee,medicines

Question 24

What is capital expenditure ?

Answer 24

Is the money spent on durable items that will last along time.

Examples: car,house,hospital

Question 25

Capital and current expenditure

Answer 25

Individual students- capital( laptop) ,Current (mobile phone credit)
Households -capital(a bed) ,Current(electricity)
Businesses -capital(machinery) ,Current(rent)
Governments -capital(roads) ,Current(wages)