Money Management Flashcards
System when planning a budget
Balance income and expenditure Use a management system Decide on your needs and wants Give priority to needs Evaluate the needs and wants Take note of changes to be made
Steps on planning a budget
Work out your weekly or monthly income In one column
Make a list of your weekly or monthly expenditures and savings in another column
Add the totals in each columnand balance your budget
If expenditure is greater than income you’re overspending
If income is greater than expenditure extra savings may be made
Income tax PAYE
This is taken automatically by your employer from gross income tax is used to pay for state services
PRSI(Pay Related Social Insurance)
This pays for benefits if you become unemployed or unabled to work due to an illness or injury
Voluntary deductions
These include health insurance pension schemes and savings
Tax credits
This is part of a person’s income that is not taxed by the government gross tax is calculated and then the tax credits are deducted from this to give the net tax
Advantages of budgeting
Maximum use is made of income
Overspending is highlighted
More security is provided - fewer financial worries
Good example is set for kids
Allowance is made for large bills and seasonal spending
Points to consider when saving
Interest rates
Security
Ease of withdrawal
Incentives
Where to save
Credit unions
Bank
Post office
Advantages of saving
Interest earned
It is often cheaper to pay for an item with money saved rather than buying on credit
There is no debt
Advantages of credit
Consumer has the use of the item before it is fully paid for
Some large items cannot be bought without credit as it would take too long to save for them e.g houses, cars
Budget
A plan for spending money
Disadvantages of credit
Credit costs more as interest is charged
Credit encourages consumers to buy more than they can afford which can lead to serious debt
The household filing system
Is useful for organising, storing, checking and monitoring important documents
Advantages of the household filing
Important documents are stored safely and can be found easily
Unpaid bills are easily found and can be paid in time
Spending patterns can be examined
Receipts and guarantees are readily available if a problem should arise
School progress can be monitored
