Topic 12 household Budgeting

Question 1

What is budgeting?

Answer 1

The process of planning your income and expenditure is called budgeting.

Question 2

What are household budgets used for?

Answer 2

Households should estimate their planned expenditure and record it (household budget).

Question 3

Why is budgeting important?

Answer 3

Budgeting is important as:
• It helps us to live within our means.
• It helps us to make sure we have enough money available to pay our bills when they are due.
• It indicates the months that there will be a lot of bills coming in to be paid.

Question 4

What is a budget surplus?

Answer 4

A budget surplus is when total income is greater than total expenditure during a particular period.

Question 5

What is a budget deficit?

Answer 5

A budget deficit is when total expenditure is greater than total income during a particular period.

Question 6

What should you do with a surplus budget?

Answer 6

If you have a surplus in your budget, you can:
• Save for a rainy day
• Spend on discretionary items
• Pay off any loans you have

Question 7

What should you do with a deficit budget?

Answer 7

If you have a deficit in your budget, you can:
• Try to earn additional income – overtime
• Reduce non-essential bills, such as entertainment bills
• Find cheaper alternatives to current bills.