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Outline two types of insurance the Sanders household might have - Leaving Cert Business - Question A - 2014
Question A
Outline two types of insurance the Sanders household might have. 1. **House / Buildings Insurance:** This type of insurance provides compensation and protection if ... show full transcript
Worked Solution & Example Answer:Outline two types of insurance the Sanders household might have - Leaving Cert Business - Question A - 2014
Step 1
Outline two reasons why the Sanders household would prepare a Household Budget.
Answer
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To plan future income and expenditure: By preparing a household budget, the Sanders can forecast their income and how they will allocate it to various expenses. This allows them to avoid overspending and ensures they live within their means.
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To avoid the risk of overdraft: Having a budget helps in tracking the household’s spending habits, which can reduce reliance on credit by preventing situations where they might accidentally exceed their available funds.
Step 2
Outline two factors the Sanders household must consider before taking out a medium term bank loan.
Answer
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Loan Terms – Interest rates/repayments: The Sanders should evaluate the interest rates offered by different financial institutions and understand the repayment schedule. Higher rates can lead to larger overall payments.
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Current Financial Situation: They need to assess their income and existing debts to ensure they can manage the additional loan repayment without affecting their current financial stability.
Step 3
Explain three features of a Current Account.
Answer
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Access to funds: A current account provides easy access to funds through methods like ATMs or checks, allowing the Sanders to withdraw or transfer money as needed for daily expenses.
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Overdraft Facility: Many current accounts offer an overdraft option, which allows account holders to withdraw more than their available balance (often with associated fees), providing a safety net in emergencies.
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Direct Debit and Standing Orders: These features facilitate automatic payments from the account for regular expenses like rent and utilities, helping the Sanders manage their bills efficiently.
Step 4
Outline one similarity and one difference for Linda between managing her office and managing her home.
Answer
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Similarity: In both settings, Linda has to handle financial planning, ensuring that both personal and household expenses are within budget constraints.
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Difference: A significant difference is that, in her office, Linda manages broader business objectives, which may involve employee salaries and company taxes, while at home, she focuses on day-to-day household expenditures and family needs.