Income & expenditure ppt

Ms O' Brien Chanel College

Income & Income & ExpenditureExpenditureIncome & Income &

ExpenditureExpenditure

Household BudgetingHousehold BudgetingHousehold BudgetingHousehold Budgeting


A Budget: is a financial plan that shows expected income and expenditure over a certain time period.

Why budget?......


1. To ensure money is available to cover costs

2. Reduce risk of impulse buying

3. Avoid build up of debt

4. Money for a ‘rainy day’


Income:

- is money or a benefit in kind you receive

- 1. Regular 2. Irregular (additional) 3. Benefit-in-Kind


1. Regular Income:

- Is what you are sure of receiving- You can plan to spend it- E.G. Wages/ Salary/Child Benefit


2. Irregular Income:

- Is what you are not sure of receiving

- You cannot plan to spend it- E.G. Bonus / Lotto Win


3. Benefit- in –Kind:

- Non money income received for work done

- Incentive to work hard- Boosts employee morale


Regular Benefit in Kind Irregular

Wages Overtime Interest Medical Insurance Pension

Salary Lotto win Gift Car Social Welfare Benefit Mobile

Bonus Commission Tax refund Club Membership

Place Incomes under correct headings


Wages•Is regular income for hours worked or number of goods produced.•E.g. Builder

Salary•Is regular income received for doing a job no matter how many hours you spend at it.•E.g. Teacher * Min wage €6.06


Types of Employee Income

1. Time Rate: Getting paid per hours worked.2. Piece Rate: Getting paid per number of

products produced. Which would you prefer?....


3. Commission•Additional income calculated as a percentage of sales.•Eg.•Mary earns 5% commission on every euro worth of clothes she sells.•How much does she earn for selling 200 euro worth?


• 200 X 5 100

= €10


4. Basic wage

- Regular weekly payment for normal hours worked.-Eg. €10 x 30 hrs = €300


5. Overtime

• Additional payment for working over your normal hours.

Eg.• Time and a half. €10 + 1/2 = €15

per/hr• Double time. €10 x 2 = €20 per/hr• Treble time. €10 x 3 = €30 per/hr


Example

• Mary receives €20/hr for a normal 30 hour week and double time for overtime.

• How much does she earn for a 32 hour week?


Answer

• Basic Pay= 30 x € 20 = €600• Overtime = 2 x (€20 x 2) = € 80• Total €680


Gross Wage

Basic Wage + Overtime before deductions


Net Wage (Take Home Pay)

Basic pay + overtime after deductions


Deductions:Voluntary (Choice) Involuntary

(Compulsory)

Pension PAYE

Medical Insurance PRSI

Savings Universal Social Contribution

Trade Union Fees


Statutory Deductions:•PAYE – Pay as you Earn

-32800@20% - Anything over @ 41% - Used by government to invest in services e.g. Health Care


PRSI: Pay Related Social Insurance-Collected as a contribution by the employee towards social welfare benefits-E.G Old age Pension, Unemployment benefit


Basic Basic hourly wage €10 Per HourNo of hours worked 6 HoursTotal wages receivedOver time Basic wage plus time and a halfNo of hours worked 3 HoursTotal Overtime wages receivedGross wage

Wage slip

Basic hourly wage: is what you get for every hour worked

Overtime: is what you receive for any extra hours you work

SolutionBasic

Basic hourly wage €10 Per Hour

No of hours worked 6 Hours

Total wages received 10 x 6 = €60

Over time

Basic wage plus time and a half

10/2 = 510+5 = €15 Per Hour

No of hours worked 3 Hours

Total Overtime wages received

15 x 3 = €45

Gross wage €60 + €45 = €105


Jan Feb Mar April May June Total

Joe 2300 2300 2600 2550 2300 2300

Mary 2800 2800 2800 3600 2800 2800

Child Ben

240 240 240 240 240 240

Interest

- - - - - 560

Total Income

Workbook pg 2 Q10

Expenditure

Fixed: Spending money on goods and servicesregularly. Amount does not vary.

Irregular: Spending money on goods and servicesregularly But the amount spent varies.

Discretionary: Spending money on things we wantbut do not need


ExpenditureFixed Irregular Discretionary

Rent Car running costs Presents

Mortgage Phone bills Holiday

Insurance Groceries Entertainment

Clothes Magazine


Current Expenditure: Spending money on day-to-day items

Capital Expenditure: Spending money on durable items for long term usage


Opportunity Cost

The item we do without when we have to make a choice between two or more actions

Opportunity CostYou have €50 to spend .

You can buy a ticket to go and see a or you can buy 5 video games.

What is your decision?


Impulse Buying

“Buying without thinking”


False Economy

Buying something because it is cheap but in the long run costs

you more

She only cost a euro dad and she is going to

have puppies!

False Economy


Reading Electricity Bills

Present 6734

Previous 5890

No of units used 844

Rate per unit .20

Sub total 168.80

Standing charge 10.00

Total charge 178.80


E.G. Question ESB Meter Reading

Present 6534Previous -4850No of units usedRate per unit X.30Sub totalAdd Standing charge

+15.00

Total charge


Present 3436Previous 2916No of units usedRate per unit .15

Sub totalAdd Standing charge

16.20

SubtotalVat @13.5%Total owed


Present Previous

Quantity and Price

Description of charges Total Amounts

3436 2916 X @ €0.15

General Units €

60 days @ €0.25

Standing Charge €15.00

Subtotal €

Vat @ 13.5% €

Total €Billing Period Pay by Total now due

14 Jul 11- 18 Sept 11

18 Oct 11 €

Example 3. Electricity Bill


Present Previous

Quantity and Price

Description of charges Total Amounts

10350 9240 X @ €0.02

General Units

Standing Charge €20.00

Public Levy €0.00

Vat @ 10%

Billing Period Pay by Total now due

14 Aug 11- 18 Oct 11

12 Nov 11


Net CashTotal Income – Total Expenditure


Opening CashMoney available at the start of the month

(Brought forward from the previous month)

Money in bank


Closing CashNet Cash + Opening Cash

Money left over at the end of the month Surplus Deficit


Sept Oct Nov Total

Net Cash 300 300 500

Opening Cash

200

Closing Cash

800 1300

Education

Income & expenditure ppt