Chapter 3: Household Budgeting

Question 0

What is net cash

Answer 0

Total income minus total expenditure

Question 1

What is a budget

Answer 1

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

Question 2

What is a budget surplus

Answer 2

When our expected income is greater than our expected expenditure

Question 3

Budget deficit

Answer 3

When our expected income is less than our expected expenditure

Question 4

What are three reasons a household prepares a budget

Answer 4

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

Question 5

Name three things you can do when you’re dealing with a budget deficit

Answer 5

1. Bills that are paid annually e.g. car insurance could be spread over the year by paying their monthly
2. reduce or cut out some of the discretionary expenditure such as holidays
3. find cheaper alternatives to our current bills e.g. use nonbranded food products instead of well-known brand names