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Expenditure

Expenditure. Opportunity Cost. Is making a decision/ choice based on limited/ scarce resources . The item not selected is the opportunity cost- opportunity foregone. Example I have €2.00. I can buy ice-cream or Pringles. I choose ice-cream. Opportunity cost = Pringles.

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Expenditure

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  1. Expenditure

  2. Opportunity Cost • Is making a decision/choice based on limited/scarce resources. • The item not selected is the opportunity cost- opportunity foregone.

  3. Example • I have €2.00. • I can buy ice-cream or Pringles. • I choose ice-cream. • Opportunity cost = Pringles. • Financial cost = €2.00

  4. Impulse Buying • Buying on the spur of the moment. • Without thinking or planning. We’re so cute! Buy us

  5. False Economy • Buying something because it is cheap even when you don’t need it. • Eg 2 for 1 • BOGOF…..

  6. Fixed Expenditure • Is money that is spent at the same time each week, month, year. • The amount is usually the same.

  7. Mortgage Rent Loan repayments Insurance TV licence Eg.

  8. Irregular Expenditure • The amount paid out varies. • It is paid at different times. • Eg. • ESB, heating, petrol, phone • Groceries • School uniform & supplies • Shoes & clothes………

  9. Discretionary Expenditure • Is money you spend on things you can live without (luxuries) • The amount varies. • Eg. • Sky tv, playstation, Wii, • brand name clothes, holidays, • Presents, entertainment, alcohol, cigs..

  10. Prioritising • If you have a limited income you must plan to spend. • You must make sure you have enough for: • Fixed expenditure first, • Then irregular expenditure • And finally only if you have money left can you afford discretionary expenditure.

  11. If you have a deficit • You must reduce • Discretionary expenditure first.

  12. Current ExpenditureRevenue Expenditure • Is spending money on day to day items. Eg. Food, drink, petrol, phone credit,

  13. Capital Expenditure • Items that last a long time. • Eg. • Car, TV, house, furniture, • Washing machine……

  14. Calculating and ESB Bill • Subtract present from previous meter reading. • Multiply by the rate per unit. • Add the standing charge (rental of equipment)

  15. ESB Meter Reading

  16. ESB Meter Reading

  17. What is a budget ? • It is a plan of future income & expenditure.

  18. Why are budgets needed ? • To ensure the best use of money. • To live within your means • (not overspend) • To highlight areas of overspending. • To see if you will have savings.

  19. What can be done with a surplus budget? Pay off loans (debt) Increase spending Save

  20. How can a deficit be reduced Increase income, work overtime.. Reduce spending especially discretionary. Spread out payments over the year. Get a bank overdraft.

  21. What is a bank overdraft? • It is a short term loan. • The bank gives you permission to spend more than you have in you account. • You must pay it back within one year. • Interest is charged.

  22. What is saving? • It is putting aside income & spending at a future date.

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