Household Budget
What is a budget ? It is a plan of future income & expenditure.
Who needs to budget ? Households Students Government Business
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.
Budget Surplus Planned Income > Planned Expenditure 500 > 300 500 > 300 200 left Surplus
What can be done with a surplus budget? Pay off loans (debt) Increase spending Save
Deficit Budget Planned Income < Planned Expenditure 200 < 300 200 < 300 0verspent by 100 deficit
How can a deficit be reduced Increase income, work overtime.. Reduce spending especially discretionary. Spread out payments over the year. Get a bank overdraft.
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.
What is saving? It is putting aside income & spending at a future date.
Why do people save? For children’s education To go on holiday To buy a car For emergencies