Household Expenditure Chapter 2 What is expenditure Expenditure

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Household Expenditure Chapter 2

Household Expenditure Chapter 2

What is expenditure? �Expenditure is money that goes out of the household or business

What is expenditure? �Expenditure is money that goes out of the household or business �We must plan for what money we have to spend to make sure we have enough

Types of Household Expenditure �Fixed Expenditure �This is expenditure that stays the same every

Types of Household Expenditure �Fixed Expenditure �This is expenditure that stays the same every month e. g. Rent, Mortgage, Loan Repayments, Milk bill �Irregular Expenditure �This is expenditure that changes every month e. g. . ESB, Telephone, Gas bills.

Types of Expenditure �Discretionary Expenditure �This is expenditure on once off or luxury items

Types of Expenditure �Discretionary Expenditure �This is expenditure on once off or luxury items e. g. . Holidays, Cd’s, Designer Clothes, Concert Tickets, Computer Games

State whether the following are Fixed/Irregular/Discretionary

State whether the following are Fixed/Irregular/Discretionary

Categories of Expenditure �Current Expenditure �This is expenditure on day-to-day items (ie. Things that

Categories of Expenditure �Current Expenditure �This is expenditure on day-to-day items (ie. Things that last a short time). Eg. Food, petrol, phone credit

Categories of Expenditure �Capital Expenditure �This is expenditure on long term items/assets such a

Categories of Expenditure �Capital Expenditure �This is expenditure on long term items/assets such a house, a car, a washing machine

Impulse Buying �This is when you buy goods that you did not plan too.

Impulse Buying �This is when you buy goods that you did not plan too. Buy on the spur of the moment �Eg. You go into a shop to buy a paper and come out with a drink and bar of chocolate

Financial Cost v Opportunity Cost �Financial cost is the actual cost of the item

Financial Cost v Opportunity Cost �Financial cost is the actual cost of the item you bought. E. g. Mars Bar for € 1. �Opportunity Cost is the cost of missing out on the opportunity of having another item instead. �Eg, you have a choice between a Mars and a Twix, they both cost € 1 each but you only have € 1, so you buy the Mars. The opportunity cost is the Twix. VS

False Economies �This is when you buy something that appears to be better value,

False Economies �This is when you buy something that appears to be better value, but in the long run turns out to be more expensive �Eg. Handbag in Penny’s for € 15 V’s Brown Thomas € 100. The cheaper bag appears better value but is ‘probably’ poorer quality.

Importance of keeping a record �As we seen in our income chapter, it is

Importance of keeping a record �As we seen in our income chapter, it is important for families to keep records of money coming in. It is equally important for households to keep a record of money going out �As we move through the course, we will be looking at how to prepare accounts such cash books and budgets and how to present this data showing the differences between income and expenditure figures

Classwork �We will use the handout to test our knowledge of this chapter and

Classwork �We will use the handout to test our knowledge of this chapter and hope to be able to answer all questions in relation to income and expenditure.