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'The average gross weekly household income in 2016 was £1,100 which is 7% higher than the figure recorded for 2010.' (Household Budget Survey, 2016) (a) Analyse the factors that affect household income - Leaving Cert Home Economics - Question 4 - 2019
Question 4
'The average gross weekly household income in 2016 was £1,100 which is 7% higher than the figure recorded for 2010.' (Household Budget Survey, 2016) (a) Analyse ... show full transcript
Worked Solution & Example Answer:'The average gross weekly household income in 2016 was £1,100 which is 7% higher than the figure recorded for 2010.' (Household Budget Survey, 2016) (a) Analyse the factors that affect household income - Leaving Cert Home Economics - Question 4 - 2019
Step 1
Analyse the factors that affect household income.
Answer
Several factors can influence household income:
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Age: Typically, as individuals age, they gain more experience and can move up the pay scale, leading to increased income. Conversely, older individuals may face decreases in income upon retirement.
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Gender: The gender gap in earnings still exists. Women are often paid less than men for similar roles, although more women entering the workforce has led to increased household income on average.
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Socio-economic group: Individuals from different socio-economic backgrounds may have varying access to education and job opportunities. Higher socio-economic status often correlates with better-paying jobs.
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Number of family members in employment: Households with multiple earners tend to have a higher income, particularly if all members are working full-time.
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Working hours: The number of hours worked can significantly impact income. Full-time jobs offer higher income compared to part-time or seasonal work.
Step 2
Suggest strategies that should be followed when planning a family budget to ensure the effective management of financial resources.
Answer
When planning a family budget, consider the following strategies:
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Identify all sources of income: List all income sources, including fixed and variable payments. Consider possible salary changes and irregular earnings.
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Track expenditures: Categorize spending into fixed, discretionary, and irregular. Knowing where money goes can help identify areas for saving.
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Set savings goals: Allocate a percentage of income for savings. Common suggestions include 5% for healthcare, 5% for clothing, and 10% for long-term savings.
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Emergency fund: Aim to save an emergency fund to cover 3-6 months of living expenses, which can assist in unexpected financial difficulties.
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Review and adjust: Regularly review the budget to assess whether spending aligns with financial goals and make adjustments as necessary.
Step 3
Outline the role of the Money Advice and Budgeting Service (MABS) for families who are experiencing financial difficulties.
Answer
The Money Advice and Budgeting Service (MABS) serves crucial roles for families facing financial challenges:
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Independent advice: MABS offers free, impartial advice on managing debt and personal finances, helping families understand their financial situation.
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Budgeting assistance: They assist families in creating and maintaining a budget to manage financial resources effectively, helping cut unnecessary expenses.
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Debt resolution: MABS provides guidance on dealing with creditors and navigating options for debt resolution, advocating for the client’s best interests.
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Access to additional resources: They can connect families with other social services and support systems, promoting a comprehensive approach to financial wellbeing.