Chapter 3 - Household Budgeting

Question 0

What is budgeting?

Answer 0

The process of matching out expected income with out expected expenditure for a particular period of time.

Question 1

What is a budget?

Answer 1

A plan for our expected income and expected expenditure for a particular period of time.

Question 2

What is net cash?

Answer 2

Total income minus total expenditure.

Question 3

What does unbranded mean?

Answer 3

Goods that are not made by a well known manufacturer.

Question 4

What is a budget surplus?

Answer 4

When our expected income is greater than our expected expenditure.

Question 5

What is a budget deficit?

Answer 5

When our expected income is less than our expected expenditure.

Question 6

Name three reasons why a household prepares a budget.

Answer 6

1. To see which months they will have a budget surplus or a deficit so that they can plan for the future and live within their means.
2. To identify months where there will be bills coming in so they ca arrange to pay such bills over a period of time or else make sure that there is enough money saved to make up for any shortfall.
3. Helps avoid impulse buying.

Question 7

Name three ways you can deal with budget deficits.

Answer 7

1. Bills that are payed annually could be spread over the year by paying them monthly or quarterly.
2. Reduce or cut out some of the discretionary expenditure, such as entertainment and holidays.
3. Find cheaper alternatives to our current bills, e.g. use unbranded food products instead of known brand names.