Photo AI
Explain three benefits to a household of preparing a budget - Leaving Cert Business - Question A - 2007
Question A
Explain three benefits to a household of preparing a budget. Cathal and Joan Lyons and their three school-going children live in Cork city. Their household income t... show full transcript
Worked Solution & Example Answer:Explain three benefits to a household of preparing a budget - Leaving Cert Business - Question A - 2007
Step 1
Benefit 1: Anticipates Financial Problems
Answer
A household budget helps in anticipating financial problems such as cash shortages. By preparing a budget, Cathal and Joan can plan ahead and avoid situations where they may run out of funds before the end of the month, for example, by being aware of their upcoming expenses.
Step 2
Benefit 2: Classification of Expenditures
Answer
Preparing a household budget allows Cathal and Joan to classify different types of expenditures. This classification can help them distinguish between essential and discretionary spending, enabling them to make informed decisions on where they could potentially cut back if needed.
Step 3
Benefit 3: Saving for the Future
Answer
Another significant benefit of preparing a budget is that it encourages savings for the future. By tracking their income and expenditure, the Lyons family can identify areas where they can save money, creating a financial buffer for emergencies or future investments.