expenditure type

1. Chapter 3: Household Expenditure

2. Learning intentions
Chapter 3
Textbook page reference: 21
In this chapter you will learn to:
› Explain the difference between fixed, irregular and discretionary
spending
› Appreciate the need to prioritise expenditure
› Explain the difference between current and capital expenditure
› Define the terms ‘impulse buying’ and ‘false economy’
› Prepare a household expenditure plan.

3. What is expenditure?
Expenditure refers to the way people spend their income in order
to satisfy various needs and wants.
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4. Types of expenditure
Fixed expenditure means that the same amount of money is spent
on a regular basis and does not depend on usage, e.g. car tax.
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5. Types of expenditure
Items of irregular expenditure occur on a less regular basis or the
amounts involved may vary with usage, e.g. fuel for car, groceries.
Chapter 3
Textbook page reference: 22

6. Types of expenditure
Discretionary expenditure is spending on non-essential items that
we choose to buy, e.g. holidays and gifts.
Chapter 3
Textbook page reference: 23

7. Current expenditure vs capital expenditure
› Current expenditure is repeated or ongoing day-to-day
spending, e.g. groceries.
› Capital expenditure is once-off or long-term spending,
e.g. a new car.
Chapter 3
Textbook page reference: 23

8. Household expenditure
The infographic illustrates common types of household spending.
Chapter 3
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9. Guidelines for effective spending
1. Prepare a budget.
2. Prioritise expenditure.
3. Avoid impulse buying.
4. Beware of false economies.
5. Consider opportunity cost.
6. Check bills, invoices and
interest rates.
Chapter 3
Textbook page reference: 24—26

10. Prepare a budget
A budget is a financial plan for expected future income and expenditure.
Chapter 3
Textbook page reference: 24

11. Prioritise expenditure
Spend money on most important things first – needs before wants.
Chapter 3
Textbook page reference: 24—26

12. Impulse buying
Avoid unplanned 'spur of the moment' spending, especially on
non-essential/expensive items.
Chapter 3
Textbook page reference: 24—26

13. Opportunity cost
Before spending, consider what else you can buy or do with
your money, e.g. saving
Chapter 3
Textbook page reference: 24—26

14. Check bills/invoices
Be aware of how much is owed, and to whom. Know when money
is due to be paid.
Chapter 3
Textbook page reference: 24—26

15. Recording and planning household expenditure
Both income and expenditure can be recorded in an analysed cash
book, in a spreadsheet or other accounting program on a computer.
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Textbook page reference: 28

16. Planning expenditure
Planning is based on the best information you have available at the
time. If something unexpected happens, you may need to review and
change your plan.
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Textbook page reference: 29

17. Planned expenditure
You can represent planned expenditure in chart format.
Chapter 3
Textbook page reference: 29

18. Solutions to overspending
1. Cut back on spending.
2. Postpone non-essential spending.
3. Spread large payments over a longer
period of time.
4. Use savings or surplus money from
previous months.
5. Generate extra income.
6. Borrow money.
Chapter 3
Textbook page reference: 30

19. Recap and Review
Chapter 3
Can you?
› Explain the difference between fixed, irregular and discretionary
spending?
› Appreciate the need to prioritise expenditure?
› Explain the difference between current and capital expenditure?
› Define the terms ‘impulse buying’ and ‘false economy’?
› Prepare a household expenditure plan?

20. Credit slide
› Shutterstock
Chapter 3