chapter 2. expenditure is money that goes out of the household or business we must plan for what...

Household Expenditure

Chapter 2

Expenditure is money that goes out of the household or business

We must plan for what money we have to spend to make sure we have enough

What is expenditure?

Fixed Expenditure This is expenditure that stays the same

every month eg. Rent, Mortgage, Loan Repayments, Milk bill

Irregular Expenditure This is expenditure that changes every

month eg. ESB, Telephone, Gas bills. 

.

Types of Expenditure

Discretionary Expenditure This is expenditure on once off or luxury

items eg. Holidays, Cd’s, Designer Clothes

Types of Expenditure

State whether the following are Fixed/Irregular/Discretionary

Capital Expenditure This is expenditure on long term

items/assets such as roads, hospitals, schools (things that last a long time)

Categories of Expenditure

Current Expenditure This is expenditure on day-to-day items (ie.

Things that last a short time). Eg. Food, petrol, wages

Categories of Expenditure

This is when you buy goods that you did not plan too. Buy on the spur of the moment

Eg. You go into a shop to buy a paper and come out with a drink and bar of chocolate

Impulse Buying

This is the cost of the item you did not buy. Eg, you have a choice between an apple

and an orange, they both cost €1 each but you only have €1, so you buy the orange. The opportunity cost is the cost of the apple.

Opportunity Cost

VS

This is when you buy something that appears to be better value

Eg. School bag in Pound Shop for €5 V’s Brown Thomas €10. The cheaper bag appears better value but is ‘probably’ poorer quality.

False Economies

This is when you pay for something after you have used it.

Eg, the telephone, you don’t pay for each call after you make it, you get the bill at the end of every two months.

Accruals