Financial Studies Unit 1 Topic 9 0.0 / 5 ? AllFinancial StudiesAll LevelsAll boards Created by: rswift91Created on: 13-01-21 08:00 What does a budget enable someone to do? Plan finances Focus on financial goals Identify budget balance or deficit 1 of 14 Types of earned income Income from salary Income if self employed Bonuses 2 of 14 Types of unearned income Benefits Return on investments Pensions Allowances Gifts Loans 3 of 14 Define Expenditure Outgoings 4 of 14 List the Mandatory expenditure (including car owners) Income Tax NI Council Tax TV Licence Motor insurance, tax and MOT 5 of 14 What is necessary/essential expenditure? Any expenses that are required for day to day needs. e.g. bills, food, basic clothes 6 of 14 What is discretionary expenditure? Left over money that you have flexibility with. e.g. to save, holidays, designer clothes 7 of 14 What does it mean to have balanced account? Your expenses and income are equal 8 of 14 What does it mean to have a negative balance? Your expenses are greater than your income 9 of 14 What does it mean to have a positive balance? Your have surplus money 10 of 14 How can you deal with a negative balance Spend less Earn more 11 of 14 What is cash flow forecasting A budget over a longer period This helps someone plan for fluctuations in income and expenses 12 of 14 How does the cost of living impact a budget? Cost of living includes inflation on goods. Long term plans will need to account for this 13 of 14 Why might someone find it difficult to buy a home once they have started renting? Income remains static Property price increase Cost of living increase Unforeseen spending 14 of 14
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