Chapter 2 - Expenditure

Expenditure

The amount of money spent by an individual or household

Opportunity Cost

The item that we did not buy because we chose another item

Financial cost

The amount of money paid for an item

False economy

A purchase that appears to save money but leads to further expenditure in the long term

Impulse buying

Unplanned spending

Items beside the checkout

End-of-aisle display

Discounts and sales

Overspending

When an individual or household’s expenditure is more than income

Not having enough money to pay bills

Being unable to save for the future

How to avoid overspending

Do not spend more money than you have

Always try to save some money in case of unexpected expenditures

Shop around to get the best deal

Don’t make choices based on a false economy

Fixed expenditure

Payment on a regular basis e.g once a week, once a month, once a year. The amount does not vary with usage

Irregular expenditure

Payment where the amount and / or when it is paid depends on usage

Discretionary expenditure

Payment for things we want but don’t need e.g holiday or videogames