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Income & expenditure ppt

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Income & expenditure ppt

  1. 1. Household BudgetingIncome & Expenditure Ms O Brien Chanel College
  2. 2. A Budget: is a financial plan that shows expected income and expenditure over a certain time period. Why budget?...... Ms O Brien Chanel College
  3. 3. 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
  4. 4. Income:- is money or a benefit in kind you receive- 1. Regular 2. Irregular (additional) 3. Benefit-in-Kind Ms O Brien Chanel College
  5. 5. 1. Regular Income:- Is what you are sure of receiving- You can plan to spend it- E.G. Wages/ Salary/Child Benefit Ms O Brien Chanel College
  6. 6. 2. Irregular Income:- Is what you are not sure of receiving- You cannot plan to spend it- E.G. Bonus / Lotto Win Ms O Brien Chanel College
  7. 7. 3. Benefit- in –Kind:- Non money income received for work done- Incentive to work hard- Boosts employee morale Ms O Brien Chanel College
  8. 8. Place Incomes under correct headingsRegular Benefit in Kind Irregular Wages Overtime Interest Medical Insurance PensionSalary Lotto win Gift Car Social Welfare Benefit MobileBonus Commission Tax refund Club Membership Ms O Brien Chanel College
  9. 9. Wages•Is regular income for hours worked ornumber of goods produced.•E.g. BuilderSalary•Is regular income received for doing a jobno matter how many hours you spend at it.•E.g. Teacher * Min wage €6.06 Ms O Brien Chanel College
  10. 10. Types of Employee Income1. Time Rate: Getting paid per hours worked.2. Piece Rate: Getting paid per number of products produced. Which would you prefer?.... Ms O Brien Chanel College
  11. 11. 3. Commission•Additional income calculated as apercentage of sales.•Eg.•Mary earns 5% commission on everyeuro worth of clothes she sells.•How much does she earn for selling200 euro worth? Ms O Brien Chanel College
  12. 12. • 200 X 5 100 = €10 Ms O Brien Chanel College
  13. 13. 4. Basic wage- Regular weekly payment for normalhours worked.-Eg. €10 x 30 hrs = €300 Ms O Brien Chanel College
  14. 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 Ms O Brien Chanel College
  15. 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? Ms O Brien Chanel College
  16. 16. Answer• Basic Pay= 30 x € 20 = €600• Overtime = 2 x (€20 x 2) = € 80• Total €680 Ms O Brien Chanel College
  17. 17. Gross WageBasic Wage + Overtime before deductions Ms O Brien Chanel College
  18. 18. Net Wage (Take Home Pay)Basic pay + overtime after deductions Ms O Brien Chanel College
  19. 19. Deductions: Voluntary (Choice) Involuntary (Compulsory) Pension PAYE Medical Insurance PRSI Savings Universal Social Contribution Trade Union Fees Ms O Brien Chanel College
  20. 20. Statutory Deductions:•PAYE – Pay as you Earn -32800@20% - Anything over @ 41% - Used by government toinvest in services e.g. Health Care Ms O Brien Chanel College
  21. 21. PRSI: Pay Related SocialInsurance-Collected as a contribution by theemployee towards social welfarebenefits-E.G Old age Pension,Unemployment benefit Ms O Brien Chanel College
  22. 22. 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
  23. 23. SolutionBasic  Basic hourly wage €10 Per HourNo of hours worked 6 HoursTotal wages received 10 x 6 = €60Over time  Basic wage plus time and a 10/2 = 5half 10+5 = €15 Per HourNo of hours worked 3 HoursTotal Overtime wages 15 x 3 = €45receivedGross wage €60 + €45 = €105
  24. 24. 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 240BenInter - - - - - 560estTotalIncome Ms O Brien Chanel College
  25. 25. 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
  26. 26. ExpenditureFixed Irregular DiscretionaryRent Car running costs PresentsMortgage Phone bills HolidayInsurance Groceries Entertainment Clothes Magazine Ms O Brien Chanel College
  27. 27. Current Expenditure: Spending moneyon day-to-day itemsCapital Expenditure: Spending moneyon durable items for long term usage Ms O Brien Chanel College
  28. 28. Opportunity Cost The item we do without when we have to make a choice between two or more actions Ms O Brien Chanel College
  29. 29. 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?
  30. 30. Impulse Buying “Buying without thinking” Ms O Brien Chanel College
  31. 31. False Economy Buying something because it ischeap but in the long run costs you more Ms O Brien Chanel College
  32. 32. False Economy She only cost a euro dad and she is going to have puppies!
  33. 33. 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
  34. 34. 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
  35. 35. Present 3436Previous 2916No of units usedRate per unit .15Sub totalAdd Standing charge 16.20SubtotalVat @13.5% Ms O Brien Chanel College
  36. 36. Example 3. Electricity BillPresent Previous Quantity Description of charges Total and Price Amounts3436 2916 X @ €0.15 General Units € 60 days @ Standing Charge €15.00 €0.25 Subtotal € Vat @ 13.5% € Total € Billing Period Pay by Total now due 14 Jul 11- 18 18 Oct 11 € Sept 11 Ms O Brien Chanel College
  37. 37. Present Previous Quantity Description of charges Total and Price Amounts10350 9240 X@ General Units €0.02 Standing Charge €20.00 Public Levy €0.00 Vat @ 10% Billing Period Pay by Total now due 14 Aug 11- 18 12 Nov 11 Oct 11 Ms O Brien Chanel College
  38. 38. Net CashTotal Income – Total Expenditure Ms O Brien Chanel College
  39. 39. Opening CashMoney available at the start of themonth(Brought forward from the previousmonth)Money in bank Ms O Brien Chanel College
  40. 40. Closing CashNet Cash + Opening CashMoney left over at the end of themonth Surplus Deficit Ms O Brien Chanel College
  41. 41. Sept Oct Nov TotalNet Cash 300 300 500Opening 200CashClosing Cash 800 1300 Ms O Brien Chanel College

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