Household Budgets Flashcards

Flashcards based on lecture notes about household budgets, covering income, expenditure, budget types, and analysis.

What is a household budget?

A financial plan that details all expected future income and expenditure for a household for a set period of time.

Why do households prepare a budget?

Living within means, thinking about spending, identifying months with many bills, planning for large expenses, and showing net cash.

What is a balanced budget?

A situation where income exactly equals expenditure.

What is a budget surplus?

Occurs when income is greater than expenditure.

How can you deal with a budget surplus?

Save/invest, repay a loan, or fund extra expenditure.

What is a budget deficit?

Occurs when income is less than expenditure.

How can you deal with a budget deficit?

Increase income, make changes to expenditure, or avail of borrowing.

How do you calculate net cash in a household budget?

Subtract total expenditure from total income.

How do you calculate closing cash in a household budget?

Add opening cash to net cash.

What becomes the opening cash for the next month?

The closing cash for one month.

What does analysing a budget mean?

Looking at a budget closely to understand the key trends and patterns.