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Money management skills are vital to running the house as a financial unit - Leaving Cert Home Economics - Question 4 - 2015
Question 4
Money management skills are vital to running the house as a financial unit. (a) Analyse three social factors that affect household income. (b) Design a family budg... show full transcript
Worked Solution & Example Answer:Money management skills are vital to running the house as a financial unit - Leaving Cert Home Economics - Question 4 - 2015
Step 1
Analyse three social factors that affect household income.
Answer
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Age: Household income often increases as individuals grow older and gain more experience in their careers. However, this can also lead to a decline in income during retirement when pensions become the primary source of income.
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Gender: The participation of both genders in the workforce can impact household income. Families with two working adults are likely to have higher earnings compared to single-income families. Additionally, gender wage gaps might affect overall household income, with women often earning less.
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Socio-economic Status: Individuals from poorer backgrounds may face challenges that limit their educational and job opportunities, thereby affecting their earning potential. Conversely, those from higher socio-economic backgrounds are often better positioned to secure well-paying jobs.
Step 2
Design a family budget (two adults and two young children) where the net weekly income is €650. Give a reason for the proposed allocation of income for each area of expenditure.
Answer
Family Budget Design
Total Net Weekly Income: €650
| Area of Expenditure | Percentage | Amount (€) | Reason |
|---|---|---|---|
| Housing | 25% | €162.50 | To cover rent/mortgage and household repairs. |
| Food | 25% | €162.50 | Essential for meals for the family. |
| Household Expenses | 15% | €97.50 | Covers utility bills (electricity, etc.). |
| Education | 5% | €32.50 | For children’s school needs like uniforms. |
| Childcare | 5% | €32.50 | Necessary for crèche or childminder. |
| Travel | 5% | €32.50 | Transportation for school and work. |
| Clothing | 5% | €32.50 | To maintain appropriate attire for children and adults. |
| Savings | 5% | €32.50 | For emergencies or future purchases. |
| Entertainment | 5% | €32.50 | To maintain family social life and well-being. |
Step 3
Recommend one type of savings scheme suitable for a family. Refer to: name of institution, type of savings scheme, interest paid, ease of access to funds, tax payable.
Answer
Recommended Savings Scheme
- Name of Institution: Post Office.
- Type of Savings Scheme: Post Office Deposit Account.
- Interest Paid: Interest payable is at 0.25%.
- Ease of Access to Funds: Funds can be accessed easily at any Post Office with proof of ID and deposit book.
- Tax Payable: Interest earned is subject to DIRT (Deposit Interest Retention Tax) of 41%.