household finances Flashcards

1
Q

role of household as financial unit in economy

A
  • pay statuatory taxes, provide revenue to maintain state services
  • spend wages on goods and services generating wealth and employment
  • mortgages and loans contribute to profits of financial institutions
  • money management skills teach kids to budget etc to prevent reliance on social welfare
  • many self sufficient but if many rely on social welfare, economy is under pressure
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2
Q

social factors affecting income

A

age
gender
socioeconomic status
culture

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3
Q

tax credits

A

reduce the amount of tax a person must pay

calculated on number of factors

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4
Q

what is prsi? name 2 prsi benefits

A

pay related social insurance
compulsory tax taken from a persons gross pay by employer before payment of wages/salry and given to the revenue commissioners. used to pay for social welfare payments eg jobseekers benefit and maternity benefit. min of 39 payments a year must be paid to claim these benefits

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5
Q

P60

A

end of year

details of pay, and income tax, prsi and usc deducted by employer and revenue

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6
Q

P45

A

given if a person leaves employment
statement of pay
used by new employer to help work out how much tax individual must pay

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7
Q

state pension

A

weekly payment to individuals over 66 who have paid min number of prsi contributions

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8
Q

widows/surviving partners pension

A

weekly payment to wife or husband or partner of a deceased person who have paid min number of prso contributions

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9
Q

jobseekers benefit

A

weekly payment to those who have paid min number of prso contributions
to qualify:
be fully unemployed or unemployed for at least 4 out 7 days
be capable, available and actively searching for work

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10
Q

maternity benefit

A

weekly payment to women on maternity leave who have paid min number of prso contributions

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11
Q

state pension (non contributory)

A

weekly payment to those over 66 who dont qualify for contributory state pension

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12
Q

widows pension (non contributory)

A

weekly payment to husband, wife or civil partner of deceased who dont qualify for contributiry state pension and has no dependent children

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13
Q

jobseekers allowance

A

weekly payment to those who dont qualify or have used up their entitlement for jobseekers benefit

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14
Q

family income supplement (FIS)

A

weekly payment available to low income families with children
receive 60% of difference between their income and income limit for family size
to qualify:
must be working min 19 hrs
have at least one dependent child
have income that falls below certain limit for their family size

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15
Q

supplementary welfare allowance

A

weekly payment by Department pf Social protection to those whose means dont meet their or their dependents needs

  • must satisfy means test
  • must be waiting on social welfare payments to be processd
  • have registered for work with their local intreo office
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16
Q

child benefit

A

monthly payment to the parents or guardians of children under 16 or under 18 if in full time education, youthreach or has a disability

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17
Q

difference between social assistance payments (contributory and non contributory) an universal payments

A
  1. to someone who has paid minimum of 39 weeks of PRSI contributions-not means tested
  2. payments to those who have insufficent PRSI contributions, means tested
  3. payment to every individual regardless of prsi contributions, nont means tested
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18
Q

factors contributing to different patterns of household expenditure

A

socio economic status
family (size, ages etc)
location - urban more expensive to live, rural- travel expenses
beliefs and values

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19
Q

ways to reduce household expenditure

A

food shopping - discount stores, own brand, non perishables when on offer

household bills-turn down thermostat, compare cost of various utility providers, use eco setting on washing machines, dishwashers etc-fill up.

clothing- buy second hand, or during sales

travel- walk or cycle,carpool, buy yearly passes

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20
Q

advantages of budgeting

A
  • helps develop good money management skills
  • areas of overspending will become apparent and debt can be avoided
  • alleviates stress and worry
  • reduces reliance on credit
  • provides financial security
  • has savings element therefore can help cover unplanned events
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21
Q

guidelines to follow when budgeting

A
  1. estimate total income
  2. list all expenditure
  3. allocate percentages of income
  4. allocate savings
    5 review and reevaluate
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22
Q

how does mabs assist families experiencing financial difficulties

A
  1. provide free, confidential, independent money advice service to those at risk of/in debt
  2. provide confidential money advice and budgeting service
  3. facilitates clients to develop the knowledge they need to avoid getting into debt and to deal effectively with debt situations if it arises
  4. identify sources of credit that best meet needs of client to pay back debt
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23
Q

credit

A

involves borrowing money to purchase goods or services and repaying it at a later date

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24
Q

discuss hire purchase referring to description, issued by, interest and agreement conditions

A

combination of hiring and buying goods, do not fully own good until last instalment paid- goods may be repossessed

  1. lending institutions and retailers eg garages and furniture shops
  2. interest about 8%
  3. must sign written agreement containing:
    - description of goods
    - cash price and hire purchase price
    - number of payment instalments
    - amount of each instalment
    - names , signatures and addresses of all parties involved
    - statement saying individual has right to withdraw within ten days - cooling off period
    - rights of parties involved
    - fees and penalties that apply
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25
Q

factors to consider when choosing credit

A

essential purchase]
interest rate]
hidden fees]
penalties for missing credit repayments]

26
Q

advantages of using credit

A
  • pay large bills and purchase expensive items
  • meet the cost of unexpected emergencies
  • option of taking advantage of special sales on short notice
  • encourages consumers to spend moeny which benefits the irish economy
27
Q

disadvantages of credit

A
may encourage impulse buying
can lead to debt
high interest rates
more expensive in long run
goods can be reposessedif consumer fails to make repayments
28
Q

consumer credit act 1995

A

provides protection for borrowers

  • regulates various aspects of credit
  • monitors credit advertising- contains APR and restrictions
  • imposes credit agreement- eg hire purchase must be in writing etc….
  • lenders who provide credit must not visit their borrowers in their workplace seeking payment
29
Q

why is it important to save

A
  • reduces reliance on credit-> debt
  • ensures money is available for essential expenditure
  • provides financial security, alleviates worry and stress
  • builds good financial reputation, good credit history and makes it easier for applying for loans
  • earn interest
30
Q

factors to consider when selecting savings scheme

A

security of saving- is it covered by government or deposit guarantee scheme?
interest rates
tax payable- DIRT?
Access to funds-can i withdraw money immediately if needed?

31
Q

premium

A

specific amount of money paid to insurance company to take out an insurance policy

32
Q

what is an insurance broker

A

they are individuals or companies that provide independent advice abouty the insurance policies available from different companies and arrange insurance policies

33
Q

factors to consider when choosing an insurance policy

A
cost
independent advice- from insurance brokers
needs and family circumstances
cover overlap
extent of cover
34
Q

what is life assurance? what protection does it give the family?

A

insurance taken out on a persons life
compensation paid upon death to family members

helps family members cover funeral costs, make mortgage repayments, pay off bills- financial security
also gives the person paying the premium peace of mind that their dependents will be looked after

35
Q

types of life assurance

A

term life assurance
whole life assurance
endowment life assurance

36
Q

types of health insurancr

A

income protection insurance/ permanent health insurance.- person reeceives 75% of earnings if the cannot work as a result of illness or injury

critical/serious illness insurance- lumpsum paid if person diagnosed with specified illness or disability

private health insurance-cover medical expenses, faster access to treatments, choice of hospitals, may cover abroad treatment, dentistry, optical treatments etc too

37
Q

what are property insurance premiums based on ?

A

value of home and its contents, location, security level

38
Q

discuss building insurance

A

covers damage to anything that cannot be moved (structural)
event of damage=compensation paid out
check the fine print
necessary for mortgages

39
Q

discuss contents insurance

A

all moveable items covered against damage, loss or theft

40
Q

all risks insurance

A

covers damage to all persona valuables inside and outside the home
optional extra policy

41
Q

advantages of insurance

A

peace of minds
cares for dependents upon death
valuables and home are covered against loss, damages and theft
access health treatments quicker
income protection insurance covers you if you cannot work, still receive 75% of wages

42
Q

mortgage

A

loan from a lending agency used to buy a house

43
Q

factors to consider when choosing a mortgage

A
interest rate
incentives offered
early repayment charge
break from repayments charge
type of interest
44
Q

fixed rate

A

interest rate is fixed for certain amount of time
no risk involved
easy to budget for
fixed interest rates are usually higher than variable rates so can be more expensive

45
Q

variable rate

A

varies with ECB rates

banks often dont pass reduction on straight away

46
Q

tracker rate

A

tracked ECB rate and is usually 1% higher

reduction passed onto borrower straight away

47
Q

conditions to qualify for a mortgage

A

amount to be borrowed- 3.5 times gross annual income
deposit- 10% for first time buyers, 20% for second time buyers
credit history
length of the mortgage- young = longer, old=shorter
good investment? little risk involved for the bank-surveyor values house
insurance-mortgage protection policy, building insurance,mortgage indemnity bond

48
Q

annuity mortgage

A

monthly mortgage repayment goes toward:
interest rate on loan
principal borrowed

little risk involved
mortgage protection policy is essential

49
Q

endowment mortgage

A
combines borrowing and investing
each monthly payment goes toward; 
interest 
premium into endowment life assurance policy (invested by company in stock market)
surplus money can be spent
less popular due  to high risk
mortgage policy required
50
Q

pension mortgage

A
combination of borrowing and investing
popular for self employed 
monthly repayments go towards:
interest
premium into pension scheme which is invested into stock market
money left over provides pension fiund
less popular, high risk
mortgage protection necessary
51
Q

mortgage protection policy

A
  • under consumer credit act 1995, mortgage lending agency must ensure borrower has mortgage protection policy in place to cover balance due if person dies.
  • insurance company provides mortgage protection policy that if borrower dies theyll pay back balance so lending agency will not be left with outstanding balance
52
Q

factors that affect housing choices (4)

A

socio economic factors
national housing policy
modern trends in social development
availability of housing

53
Q

socio economic factors that affect housing choices

A
income
size
family stage
personal preferences
special needs
location

{ill save for personal spending fro later}

54
Q

national housing policy

A

aims to enable all individuals and families to access good-quality housing appropriate to their needs in the community of choice by:

  • improving private rental market by enforcing minimum accommodation standards supporting tennants rights (think bedsits)
  • increase supply of social housing and quality of existing social housing through regeneration and improvement works programmes
  • support ppl with disabilities to live independently by providing housing adaptation grants and financial assistance
  • support vulnerable and deprived by providing traveller-specific accommodation and housing supports to help alleviate homelessness
  • protecting individuals in mortgage arrears by estabishing code of conduct for financial institutions to follow
55
Q

discuss modern trends in housing development

A
  • negative equity= ppl choose to extend, adapt or renovate instead of sell
  • mixed development estates are popular
  • apartments popular in cities especially for young professionals
  • one off houses still being built rurally , mire energy efficient w modern design features eg open plan
56
Q

availability of house

A

private-urban= shortage, high prices, rural= ghost estates, demand low

rental-costs increased dramatically due to short supply, residential tenancies act was amended in 2015, rent can only go up once every two years now w/ 90 days notice

social housing-severe shortage

57
Q

discuss HAP

A

housing assistance payment

  • available to those approved for social housing
  • enable them to obtain accommodation in private sector
  • local authorities pay landlord, tennants pay local authority a contribution based on income and ability to pay
  • available for those full time working so does not prevent people looking for work
58
Q

mortgage allowance scheme

A

-available to social housing tennants who want to take out mortgage to buy or build private house
-ease transition from social housing to mortgage, ensure repayments can be met
-

59
Q

home choice loan (local authority mortgage)

A

for 1st time buyers unable to obtain mortgage
loan can be up to 92 % of house price
up to 30 years long
applicants must provide evidence that they could not obtain finance from two banks or building societies
must bein continuous employment for minimum of one year

60
Q

incremental purchase scheme

A

provides affordable route to homeownership for households in social housing
applies to new build social housing or approved houses only
discount of 40-60% depending on income
applicant must take out mortgage with lending agency to pay balance back to local authority