A1 Planning expenditure

Question 1

Why plan expenditure?

Answer 1

• Avoid getting into debt
• To control costs
• Avoid legal action/ repossession
• To remain solvent
• Good credit rating
• Avoid bankruptcy
• Manage money to fund purchases
• Generate income and savings
• Provide insurance against loss or illness
• counter effects of inflation

Question 2

Benefits of planning expenditure?

Answer 2

• Left over money to save
• Saving can provide security
• Good credit rating
• Avoiding debt

Question 3

Risks of not planning expenditure?

Answer 3

• get into debt
• Poor credit rating so can’t borrow money
• No saving/ security
• Unable to pay bills