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1

Q. Suggest strategies that should be followed when planning family budgets to ensure effective management of financial resources

List the strategies

Estimate total income

List all expenditure

Allocate a percentage of income

Allocate savings

Review and evaluate

2

Q. Suggest strategies that should be followed when planning family budgets to ensure effective management of financial resources
(Strategy 1 = Estimate total income)

Include salary/wages

Include benefits or any other form of income

Do not include irregular income such as bonuses

Divide estimate by twelve if making a monthly budget

Divide by 52 if making a weekly budget

3

Q. Suggest strategies that should be followed when planning family budgets to ensure effective management of financial resources
(Strategy 2 = List all expenditure)

List essential expenditure e.g. mortgage

List discretionary expenditure e.g. entertainment

4

Q. Suggest strategies that should be followed when planning family budgets to ensure effective management of financial resources
(Strategy 3 = Allocate a percentage of income)

A percentage of total income should be allocated to each listed expenditure e.g. 25 % for housing

5

Q. Suggest strategies that should be followed when planning family budgets to ensure effective management of financial resources
(Strategy 4 = Allocate savings)

Every budget contains a saving element to cover unplanned eventualities

Savings allow for funds to be available in times of increased expenditure

Savings should be lodged into a separate savings account

6

Q. Suggest strategies that should be followed when planning family budgets to ensure effective management of financial resources
(Strategy 5 = Review and evaluate)

Carry out regular reviews of the budget to ensure it is effective

Keep bills and receipts to monitor spending

Recalculate budgets if there is a change in circumstances e.g. change in job

7

Outline the role of MABS for families who are expecting financial difficulties

It is a free, confidential and independent service for people in debt or at risk of getting into debt

Provide confidential money advice and budgeting service

Facilitate clients to develop the knowledge and skills they need to avoid getting into debt, and to deal effectively with debt situations that arise

Identify sources of credit that best meet the needs of clients

8

Design a family budget who have a net weekly income of 650 euros

Housing: 650 x 25%
Food: 650 x 25%
Household expenses: 625 x 15%
Education/childcare: 625 x 10%
Travel: 625 x 5%
Clothing: 625 x 5%
Medical: 625 x 5%
Savings: 625 x 5%
Entertainment/leisure: 625 x 5%

9

Why is 25% of one's net income allocated to housing?

To cover the cost of a mortgage, rent, household insurance and maintenance

10

Why is 25% of one's net income allocated to food?

To cover the cost of grocery shopping and eating out

11

Why is 15% of one's net income allocate to household expenses?

To cover the cost of bills such as electricity, water, fuel, Wi-Fi, TV license

12

Why is 10% of one's net income allocated to education/childcare?

To cover the cost of creche or childcare, uniforms, books, college fees

13

Why is 5% of one's net income allocated to travel?

To cover the cost of petrol or diesel, car tax and insurance, public transport costs

14

Why is 5% of one's net income allocated to clothing?

To cover the cost of clothing for work, casual wear or evening wear

15

Why is 5% of one's net income allocated to medical?

To cover the cost of doctor or dentist fees or prescriptions

16

Why is 5% of one's net income allocated to savings?

To cover the cost of emergencies, special occasions or future events

17

Why is 5% of one's net income allocated to entertainment/leisure?

To cover the cost of cinema, sports activities or holidays

18

Discuss four reasons why someone should create a budget

Savings element covers the cost of unplanned eventualities e.g. loss of job

Saving regularly teaches children the value of money and money management skills

Reduces reliance on credit which helps to avoid debt as credit can incur high interest rates

Helps individuals to develop good money management skills

Areas of overspending become apparent and debt can be avoided as all expenditure must be listed and receipts and bills are reviewed

Provides financial security as it ensures bills are paid