Household BudgetingIncome & Expenditure Ms O Brien Chanel College
A Budget:is a financial plan that shows expected income and expenditure over a certain time period. Why budget?...... Ms O Brien Chanel College
1. To ensure money is available to cover costs2. Reduce risk of impulse buying3. Avoid build up of debt4. Money for a ‘rainy day’ Ms O Brien Chanel College
What is Income?It is money or a benefit in kind you receive 1. Regular 2. Irregular (additional) 3. Benefit-in-Kind Ms O Brien Chanel College
1. Regular Income:Is what you are sure of receivingYou can plan to spend itE.G. Wages/ Salary/Child Benefit Ms O Brien Chanel College
2. Irregular Income:Is what you are not sure of receivingYou cannot plan to spend itE.G. Bonus / Lotto Win/ Tax Rebate Ms O Brien Chanel College
3. Benefit- in –Kind:Non money income received for work doneIncentive to work hardBoosts employee morale Ms O Brien Chanel College
Place Incomes under correct headingsRegular Benefit in Kind Irregular Wages Overtime Interest Pension DividendSalary Lotto win Gift Car Social Welfare Benefit MobileBonus Commission Tax refund Club Membership Ms O Brien Chanel College
Wages Is regular income for worked or number of goods produced. E.g. BuilderSalary Is regular income received for doing a job no matter how many hours you spend at it. E.g. Teacher * Min wage €6.06 Ms O Brien Chanel College
Types of Employee Income1. Time Rate: Getting paid per hours worked2. Piece Rate: Getting paid per number of products produced. Which would you prefer?....
CommissionAdditional income calculated as apercentage of sales.ExampleMary works in . She earns5% commission on every euro worth ofclothes she sells.How much does she earn for selling €200worth?
Solution 200 X 5 100 = €10 Commission Ms O Brien Chanel College
Basic WageRegular weekly payment for normal hoursworkedExample: €10 per hour x 30 hrs = €300 I love my job..
OvertimeAdditional payment for working over yournormal hoursExample:Ben gets €10 per hour working in a petrol station. On Saturday he worked two hours overtime on time and a half. How much did he receive for overtime?
Example• Mary receives €20/hr for a normal 30 hour week and double time for overtime.• How much does she earn for a 32 hour week? Ms O Brien Chanel College
Answer• Basic Pay= 30 hours x € 20 = €600• Overtime = 2 x (€20 x 2) = € 80• Total €680 Ms O Brien Chanel College
Gross Wage Basic Wage + Overtime before deductions Ms O Brien Chanel College
Net Wage(Take Home Pay) Basic pay + overtime after deductions Ms O Brien Chanel College
Deductions: Voluntary Involuntary (Choice) (Compulsory) Pension PAYE Medical Insurance PRSI Savings Universal Social Contribution Trade Union Fees Ms O Brien Chanel College
Statutory Deductions:PAYE – Pay as you Earn- 32800 @ 20%- Anything over @ 41%- Used by government to invest in ServicesExample: Health Care Ms O Brien Chanel College
Statutory Deductions:PRSI: Pay Related Social InsuranceCollected as a contribution by the employee towards social welfare benefitsExample: Old age Pension Unemployment benefit Ms O Brien Chanel College
Wage slipBasic hourly wage: is what you get for every hour workedOvertime: is what you receive for any extra hours you work Basic Basic hourly wage €10 Per HourNo of hours worked 6 HoursTotal wages receivedOver time Basic wage plus time and ahalfNo of hours worked 3 HoursTotal Overtime wagesreceivedGross wage Ms O Brien Chanel College
Budgets Workbook pg 2 Q10 Jan Feb Mar April May June TotalJoe 2300 2300 2600 2550 2300 2300Mary 2800 2800 2800 3600 2800 2800Child 240 240 240 240 240 240BenIntere - - - - - 560stTotalIncome Ms O Brien Chanel College
ExpenditureFixed: Spending money on goods and servicesregularly. Amount does not vary.Irregular: Spending money on goods and servicesregularly But the amount spent varies.Discretionary: Spending money on things we wantbut do not need
ExpenditureFixed Irregular DiscretionaryRent Car running costs PresentsMortgage Phone bills HolidayInsurance Groceries Entertainment Clothes Magazine Ms O Brien Chanel College
Current Expenditure: Spending moneyon day-to-day itemsCapital Expenditure: Spending moneyon durable items for long term usage Ms O Brien Chanel College
Opportunity Cost The item we do without when we have to make a choice between two or more actions Ms O Brien Chanel College
Opportunity CostYou have €50 to spend .You can buy a ticket to go and see aor you can buy 5 video games.What is your decision?
Impulse Buying “Buying without thinking” Ms O Brien Chanel College
When w as the last tim e you boughtsometh ing on impulse ?
False Economy Buying something because it ischeap but in the long run costs you more… Ms O Brien Chanel College
False Economy She only cost a euro dad and she is going to have puppies! Discuss
Reading Electricity Bills Present 6734 Previous 5890 No of units used 844 Rate per unit .20 Sub total 168.80 Standing charge 10.00 Total charge Ms O Brien Chanel College 178.80
E.G. Question ESB Meter Reading Present 6534 Previous -4850 No of units used Rate per unit X.30 Sub total Add Standing charge +15.00 Total charge Ms O Brien Chanel College
E.G. Question ESB Meter ReadingPresent 3436Previous 2916No of units usedRate per unit .15Sub totalAdd Standing charge 16.20SubtotalVat @13.5%Total owed Ms O Brien Chanel College
Budgets Net CashTotal Income – Total Expenditure Ms O Brien Chanel College
Net Cash Here’s €10 pocket money If I have €10 income and I spend €7 on a newThanks football I will have net cash of €3!
Opening CashMoney available at the start of themonth(Brought forward from the previousmonth)Money in bank Ms O Brien Chanel College
Net Cash + Opening Cash= Closing CashMoney left over at the end of themonth Surplus Deficit Ms O Brien Chanel College