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'Budgeting has become an ever more important household task in recessionary times.' (a) Discuss four of the principle guidelines that should be followed when drawing up a budget for a family - Leaving Cert Home Economics - Question 4 - 2012
Question 4
'Budgeting has become an ever more important household task in recessionary times.' (a) Discuss four of the principle guidelines that should be followed when drawin... show full transcript
Worked Solution & Example Answer:'Budgeting has become an ever more important household task in recessionary times.' (a) Discuss four of the principle guidelines that should be followed when drawing up a budget for a family - Leaving Cert Home Economics - Question 4 - 2012
Step 1
Discuss four of the principle guidelines that should be followed when drawing up a budget for a family.
Answer
When creating a budget for a family, it's crucial to follow these guidelines:
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Identify All Sources of Income: Begin by listing all income sources such as salaries, wages, social welfare benefits, and any other earnings. This step ensures a clear understanding of the total funds available.
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List All Items of Expenditure: Enumerate all fixed and variable expenses, including seasonal and discretionary spending. This comprehensive listing helps in tracking where money goes each month.
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Draft a Detailed Budget Plan: Allocate a portion of income to each expense category. It is helpful to calculate potential savings and plan for both immediate and long-term financial needs. Be realistic about these allocations.
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Regularly Review and Adjust the Budget: Set aside time to evaluate the budget regularly. This can involve assessing for changes in income, unexpected expenses, or financial goals. Adjust the plan as necessary to stay on track and responsive to changing circumstances.
Step 2
Describe four different ways a consumer could reduce expenditure when managing the household budget.
Answer
To effectively manage household expenditures, consumers can adopt the following strategies:
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Make a Shopping List: Creating a detailed shopping list before heading out helps avoid impulsive purchases and stick to essentials.
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Shop at Discount Stores: Utilize second-hand shops or discount stores to procure necessary household items at lower prices, helping to stretch the budget.
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Buy in Bulk: Purchasing staple items in bulk can reduce per-unit costs significantly, aiding in better financial management.
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Use Energy-Efficient Appliances: Investing in energy-efficient appliances can help decrease utility bills over time, contributing to long-term savings.
Step 3
Outline three reasons why it is important for a family to save money and name two saving schemes suitable for a low-income family.
Answer
Saving money is essential for families for several reasons:
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Financial Security: Having savings cushions families against unforeseen expenses, such as medical emergencies or home repairs, providing peace of mind.
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Future Investments: Savings enable families to invest in future needs, such as education or purchasing a home, which can improve overall quality of life.
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Emergency Preparedness: A savings fund can help a family manage unexpected financial challenges, such as job loss, ensuring they can maintain stability.
As for suitable saving schemes for a low-income family, consider:
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An Post: This offers deposit accounts with low minimum balances and competitive interest rates.
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Credit Unions: These often provide accessible save account options, allowing families to save with benefits like lower fees and favorable loan conditions.