In relation to budgeting explain and give an example of each of the following:
Essential expenditure
Discretionary expenditure - Leaving Cert Home Economics - Question 12 - 2007
Question 12
In relation to budgeting explain and give an example of each of the following:
Essential expenditure
Discretionary expenditure
Worked Solution & Example Answer:In relation to budgeting explain and give an example of each of the following:
Essential expenditure
Discretionary expenditure - Leaving Cert Home Economics - Question 12 - 2007
Step 1
Essential expenditure
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Answer
Essential expenditure refers to necessary spending that is crucial for basic living. This can be categorized into two types: fixed and irregular.
Fixed Essential Expenditure: This includes regular, predictable payments such as mortgage or rent, and insurances. These are costs that do not change from month to month.
Irregular Essential Expenditure: These can be variable costs that arise as necessary; for example, medical expenses such as visiting a doctor or purchasing clothing, which may not occur regularly but are still essential.
Step 2
Example
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Answer
Examples of essential expenditure include:
Fixed: Mortgage, rent, and insurances.
Irregular: Car repair, doctor visits, clothing.
Step 3
Discretionary expenditure
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Answer
Discretionary expenditure involves spending on non-essential items or luxuries. These types of expenses are not necessary for survival but can enhance quality of life. This category can include entertainment, luxury items, and other non-necessities.
Step 4
Example
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Answer
Examples of discretionary expenditure include:
Luxuries such as entertainment options (e.g., movies), alcohol, and cosmetics.
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