Household Finances Flashcards
Role of the household as a financial unit within the family
Contribute to country’s economy (taxes maintain state services)
Spend wages on goods and services generating wealth and employment
Mortgages and loans contribute to profits of financial institutions eg banks
Self sufficiency relieves pressure on state
Money management skills passed onto children - reduces reliance on social welfare in future
Social factors affecting income
Age (older= more qualifications, moving up pay scale)
Gender
Socio economic status
Culture (salariales differ from country to country, women working)
Sources of household income
Wage Salary Social welfare payments Pensions Rental property Savings and investments
Difference between wage and salary
Wage is paid daily/weekly for work done
Salary is paid monthly and is fixed
Gross income
Before any deductions
Net income
Take home pay
2 types of deductions from pay
Compulsory
Voluntary
Examples of compulsory deductions
PAYE
PRSI
USC
Examples of voluntary deductions
Private health insurance eg VHI Tarde union subscription eg SIPTU Loan repayments eg car Savings Pension fund
What is an occupational pension
Set up by employers in large companies,
Both employee and employee contribute
What does PAYE stand for
Pay as you earn
What is PAYE used for
To run country eg state services, infrastructure
What are tax credits
Money taken off tax to be paid
Depend on circumstances eg marital status
What does PRSI stand for
Pay related social insurance
What is PRSI used for
Pay for social welfare payments
What does USC stand for
Universal social charge
What is USC used for
State finances and debt repayments
Advantages of pensions
Compensate for reductions in income on retirement
Protection for pension holders’ dependents in even of death
What is p60
Document containing details of pay and tax, received each year from the employer
What is P45
Document given to a person leaving their place of work.
It includes details of pay and tax and is passed on to the new employer to help work out tax
3 types of social welfare payments
Social insurance payments
Social assistance payments
Universal payments
Social insurance payments are paid to those who
Paid 39 weeks of PRSI
Examples of social insurance payments
State pension
Widow/widower payment
Jobseekers benefit
Maternity and paternity benefit
Jobseekers benefit given for how many months before job seekers allowance
6-9monghs
Length of maternity leave
26 weeks
Length of paternity leave
2 weeks
Examples of social assistance payments
State pension Widow/widowers pension Job seekers benefit Family income supplement Supplementary Welfare Allowance One parent family payment
Examples of universal payments
Child benefit
When are social assistance payments made
Means tested
When insufficient PRSI payments are paid
What’s supplementary welfare allowance
For people waiting on social welfare
What’s a universal payment
Paid to all regardless of PRSI payments
Who gets Child benefit
Parents/ guardians of u16, u18 in full time education or with disability
Two types of household expenditure
Discretionary
Essential
Examples of essential expenditure
Fixed eg mortgage, insurance
Irregular eg food, educational needs, clothing
Examples of discretionary expenditure
Holidays
Leisure
Entertainment
Factors that would vary household expenditure
Socio economic status
Fami,y size/stage
Location (urban=higher rent … rural=higher travel costs)
Beliefs/values eg private education
Ways to reduce household expenditure
Discount stored eg Aldi, Lidl Own brand Avail of special offers Compare costs of various utility providers eg sky vs eir Only turn on appliances when full Buy second hand clothes Walk/ cycle / public transport
