Household Income: 🏠💰

Question 1

3 types of regular income for a household

Answer 1

Wages
Child benefit
Pension

Question 2

What is windfall income

Answer 2

Windfall income refers to money received unexpectedly, often in large amounts, and is usually not earned through regular work or effort. E.g lotto or inheritance

Question 3

What is a salary

Answer 3

Fixed annual payment. (as a reward for work, given to an employee)
Paid in equal monthly instalments

Question 4

What is intrest on savings

Answer 4

reward for savers, receive interest on savings.
Dividends on shares: Portion of company’s profits paid to shareholders.

Question 5

What is household income

Answer 5

Household income is the total income earned by all members of a household over a specific period (usually monthly or annually). This includes all sources of money that come into the household, such as wages, salaries,

Question 6

Explain why it’s important for a household to create a budget based on their income

Answer 6

Budgeting ensures that a household can track its spending and make sure it doesn’t exceed its income Budgets help track how much money is coming in (income) and how much is going out (expenditure)
By having a clear budget, households can avoid falling into debt by ensuring they don’t spend more than they earn

Question 7

Explain how a reduction in household income (e.g., loss of a job or reduced hours) might affect a family’s standard of living

Answer 7

A reduction in household income can result in lower living standards, with families forced to make difficult decisions about spending, saving, and prioritizing needs. Basic needs might become harder to meet, and there may be long-term impacts on financial security, mental well-being, and the family’s overall quality of life.

Question 8

If a household receives €5,000 as windfall income (e.g., a lottery win), how might they manage it within their household budget

Answer 8

Household may use windfall income to to reduce or completely pay off these debts. This would relieve financial pressure or The household can use the windfall to save or invest for long-term goals, such as retirement, education, or buying a home.

Question 9

Differentiate between wages and salaries

Answer 9

While both wages and salaries refer to payments received for work, there are key differences
Wages are paid based on hours worked and can vary week to week.
Salaries are paid as a fixed amount and don’t change based on hours worked.

Question 10

What are overtime payments

Answer 10

When worked over standard week (39hrs) may be
entitled to receive a higher rate for extra hours