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Business JC
Expenditure Keywords
Term | Definition |
---|---|
Irregular Expenditure | Spending on items which have varying amounts and varying dates, e.g. Groceries, ESB, Phone |
Discretionary Expenditure | Spending on items that are optional, e.g. holidays, cinema, meals out. |
Impulse Purchase | Making an unplanned purchase on the spur of the moment without thinking. Going into a shop to buy only a newspaper and buying a chocolate bar at the counter also. |
Opportunity Cost | When making choices with scarce resources, in choosing one item, the opportunity cost is the item we must do without. |
Fixed Expenditure | Spending on items that have a set amount and on set date, e.g. mortgage, rent |
False Economy | A short-term saving may lead to a long-term costs. E.g. Tom needs new car tyres.. He sees a set for €240 and another for €360. He is tempted to buy the cheaper set. But these may last him 15,000km whereas the quality ones will last 30,000km. |
Effective purchasing | Buying goods at (1)the right time (2) right place (3) right quality (4) right quantity |
Guidelines for effective purchasing | (1) prepare a budget (2) prioritise expenditure (3) avoid impulse buying (4) beware of false economies (5) beware of opportunity cost (6) check invoices |