Income and expenditure

1. Income & Expenditure
Household Budgeting
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2. A Budget: is a financial plan that shows
expected income and expenditure over a
certain time period.
Why budget?......
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3. 1. To ensure money is available to
cover costs
2. Reduce risk of impulse buying
3. Avoid build up of debt
4. Money for a ‘rainy day’
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4. Income:
- is money or a benefit in kind you
receive
- 1. Regular
2. Irregular (additional)
3. Benefit-in-Kind
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5. 1. Regular Income:
- Is what you are sure of receiving
- You can plan to spend it
- E.G. Wages/ Salary/Child Benefit
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6. 2. Irregular Income:
- Is what you are not sure of receiving
- You cannot plan to spend it
- E.G. Bonus / Lotto Win
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7. 3. Benefit- in –Kind:
- Non money income received for work
done
- Incentive to work hard
- Boosts employee morale
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8. Regular
Wages
Benefit in Kind Irregular
Overtime Interest Medical Insurance Pension
Salary Lotto win Gift Car Social Welfare Benefit Mobile
Bonus Commission Tax refund Club Membership
Place Incomes under correct headings
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9. Wages
•Is regular income for hours worked or
number of goods produced.
•E.g. Builder
Salary
•Is regular income received for doing a job
no matter how many hours you spend at it.
•E.g. Teacher
* Min wage €6.06
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10. Types of Employee Income
1. Time Rate:
Getting paid per hours worked.
2. Piece Rate:
Getting paid per number of
products produced.
Which would you prefer?....
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11. 3. Commission
•Additional income calculated as a
percentage of sales.
•Eg.
•Mary earns 5% commission on every
euro worth of clothes she sells.
•How much does she earn for selling
200 euro worth?
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12. • 200 X 5
100
= €10
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13. 4. Basic wage
- Regular weekly payment for normal
hours worked.
-Eg. €10 x 30 hrs = €300
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14. 5. Overtime
• Additional payment for working over
your normal hours.
Eg.
• Time and a half. €10 + 1/2 = €15
per/hr
• Double time. €10 x 2 = €20 per/hr
• Treble time. €10 x 3 = €30 per/hr
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15. 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?
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16. Answer
• Basic Pay= 30 x € 20 = €600
• Overtime = 2 x (€20 x 2) = € 80
• Total €680
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17. Gross Wage
Basic Wage + Overtime before deductions
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18. Net Wage
(Take Home Pay)
Basic pay + overtime after deductions
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19. Deductions:
Voluntary (Choice)
Pension
Medical Insurance
Savings
Trade Union Fees
Involuntary (Compulsory)
PAYE
PRSI
Universal Social
Contribution
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20. Statutory Deductions:
•PAYE – Pay as you Earn
-32800@20%
- Anything over @ 41%
- Used by government to
invest in services e.g. Health Care
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21. PRSI: Pay Related Social
Insurance
-Collected as a contribution by the
employee towards social welfare
benefits
-E.G Old age Pension,
Unemployment benefit
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22. Basic
Basic hourly wage
No of hours worked
Total wages received
Over time
Basic wage plus time and a
half
No of hours worked
Total Overtime wages
received
Gross wage
€10 Per Hour
6 Hours
3 Hours
Wage slip
Basic hourly wage: is what you get for every hour worked
Overtime: is what you receive for any extra hours you work
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23. Solution
Basic
Basic hourly wage €10 Per Hour
No of hours worked 6 Hours
Total wages received 10 x 6 = €60
Over time
Basic wage plus time and a 10/2 = 5
half 10+5 = €15 Per Hour
No of hours worked 3 Hours
Total Overtime wages 15 x 3 = €45
received
Gross wage €60 + €45 = €105
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24. Ms O' Brien Chanel College
Jan Feb Mar April May June Total
Joe 2300 2300 2600 2550 2300 2300
Mary 2800 2800 2800 3600 2800 2800
Child
Ben
240 240 240 240 240 240
Inter
est
- - - - - 560
Total
Incom
e
Workbook pg 2 Q10
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25. Expenditure
Fixed: Spending money on goods and services
regularly. Amount does not vary.
Irregular: Spending money on goods and services
regularly But the amount spent varies.
Discretionary: Spending money on things we want
but do not need
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26. Expenditure
Fixed Irregular Discretionary
Rent Car running costs Presents
Mortgage Phone bills Holiday
Insurance Groceries Entertainment
Clothes Magazine
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27. Current Expenditure: Spending money
on day-to-day items
Capital Expenditure: Spending money
on durable items for long term usage
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28. Opportunity Cost
The item we do without when we have
to make a choice between two or
more actions
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29. Opportunity Cost
You have €50 to spend .
You can buy a ticket to go and see a
or you can buy 5 video games.
What is your decision?
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30. Impulse Buying
“Buying without thinking”
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31. False Economy
Buying something because it is
cheap but in the long run costs you
more
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32. She only cost
a euro dad
and she is
going to have
puppies!
False Economy
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33. Ms O' Brien Chanel College
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 178.80
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34. Ms O' Brien Chanel College
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
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35. Ms O' Brien Chanel College
Present 3436
Previous 2916
No of units used
Rate per unit .15
Sub total
Add Standing charge 16.20
Subtotal
Vat @13.5%
Total owed
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36. Present Previous Quantity
and Price
Description of charges Total
Amounts
3436 2916 X @ €0.15 General Units €
60 days @
€0.25
Standing Charge €15.00
Subtotal €
Vat @ 13.5% €
Total €
Billing Period Pay by Total now due
14 Jul 11- 18
Sept 11
18 Oct 11 €
Example 3. Electricity Bill
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37. Present Previous Quantity
and Price
Description of charges Total
Amounts
10350 9240 X @
€0.02
General Units
Standing Charge €20.00
Public Levy €0.00
Vat @ 10%
Billing Period Pay by Total now due
14 Aug
Oct 11
11- 18 12 Nov 11
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38. Net Cash
Total Income – Total Expenditure
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39. Opening Cash
Money available at the start of the
month
(Brought forward from the previous
month)
Money in bank
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40. Closing Cash
Net Cash + Opening Cash
Money left over at the end of the
month
Surplus
Deficit
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41. Sept Oct Nov Total
Net Cash 300 300 500
Opening
Cash
200
Closing Cash 800 1300
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