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Business JC
Household Budget Keywords
Term | Definition |
---|---|
Budget | This is a financial plan which forecasts future income, expenditure and savings over a period of time. |
Budget Deficit | Occurs when we spend more money than we earn. |
Budget Surplus | Occurs when we spend less money than we earn. |
Net Cash | The amount we get when we subtract our total expenditure from our total income. |
Reasons to Prepare a Household Budget | (i) To ensure that a family live within their means. (ii) To identify which months they will need to arrange borrowings. (iii) To identify areas of expenditure that they could cut back on. |
What can we do with a Budget Deficit | (i) Cut back on discretionary expenditure, e.g. birthdays, holidays, entertainment. (ii) Spread out some payments over a number of months, e.g. pay house insurance by instalments. (iii) Shop around for cheaper household bills, e.g. phone, groceries. |
Current(Revenue) Expenditure | Spending on day-to-day items needed to run a household on a daily basis, e.g. food, petrol, clothes. |
Capital Expenditure | Spending on goods that will last a long period of time, e.g. new car, TV, Fridge |