Household Budget Economics Worksheet


This is a Household Budget Question.
Answer all parts of this question:
On page 9 of Section A is a partially completed Budget form for the Maguire household for
2007. You are required to complete this form by filling in the figures for the ‘Estimate
April to December’ column, and the ‘Total for year’ column. The following information
should be taken into account:
Tom expects to get a promotion in July and this will result in a rise of 30% in salary
from 1 July.
Breda expects to earn an extra €350 for overtime in August and will get a Christmas
bonus of €500 in December.
The Maguire household expect to receive €2,000 in dividends in May.
The house mortgage will increase by €27 per month from 1 June.
The car loan will be fully paid off following the August payment.
House insurance is payable monthly and will decrease by 20% from 1 June.
Household costs will remain at the same level, except for the month of August, when
they will decrease by 50%.
Light and heat for the 12 months (January – December 2007) is expected to be €850.
Mobile phone costs are estimated to be €70 per month from 1 April and the house
phone costs to be €100 every second month from 1 May.
Car running costs are expected to remain at the same level each month.
Tom and Breda plan to go to France on a holiday which will cost €2,500. The balance
must be paid in July.
The household expect to spend €150 on presents in July and another €450 in December.
There is no further household decoration planned for 2007.
Answer the following questions in the spaces provided on page 10 of Section A:
Explain the term ‘Dividends’ in the Maguire Household Budget.
At the end of March 2007, what will the expected closing cash balance be for the
Maguire household?
The expected closing cash balance has changed from February to March. Explain
two major reasons for this change.
Identify one method of dealing with this temporary situation at the end of March.
(40 marks)
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