Consumer Competence 3 - Management Systems

Consumer Competence 3 - Management Systems

• Learning Intentions:
  • Recall the importance of a good home management system.
  • Identify skills needed for a good home management system.
  • Identify the different stages of financial literacy (money as you grow).
  • Discuss factors influencing spending and wise spending habits.
  • Define money management.
  • Understand different types of income.
  • Differentiate statutory and voluntary deductions.
  • Explore essential and non-essential income expenditure.
  • Analyse and create budgets.
  • Explore the advantages of budgeting.
  • Carry out a detailed study of savings and credit.

FRM (Family Resource Management)

• Definition: The skillful handling and use of available resources to meet family demands and needs, achieving goals through wise resource management.
• Purpose:
  • Make wise and efficient use of resources.
  • Assist individuals and families to achieve goals.
  • Improve the quality of family life.
• Types of Management Systems:
  • Open system: Involves external support and resources (e.g., childcare).
  • Closed system: Family relies on its own resources and avoids outside help (e.g., growing own vegetables).

Components of the Management System

• Inputs: Resources like time, money, and demands like school and childcare.
• Throughputs: Activities like meal planning, organizing, and sticking to budgets.
• Outputs: Assessment (evaluation) and feedback.

Closer Look at Management System Components - Example

• Inputs: Resources (time/money), demands (school/childcare)
• Throughputs: Plans (meal plan, shopping list), implementing the plan (groceries) sticking to budget.
• Outputs: Evaluate the plan and provide feedback.

Efficient Use of FRM

• Factors Influencing FRM:
  • Time
  • Money
  • Transport
  • Age of family members
  • Family size
• Examples of Efficient FRM Use:
  • Budgeting
  • Shopping lists
  • Meal plans
  • Delegating household work
• Effective Communication in FRM:
  • Wise decision-making
  • Avoiding conflict
  • Democratic approach ensuring all parties are heard.

Money Management

• Definition: Planning spending wisely to meet needs and avoid debt.
• Influencing Factors: income, lifestyle, personal preferences, family size, age and life stage, health.
• Components:
  • Making decisions about money
  • Planning essential and non-essential expenses
  • Planning planned and unplanned expenses
  • Record keeping
  • Evaluating spending (e.g., home filing system for recording expenses)

Budgeting

• Definition: A plan for spending and saving, balancing income and expenditure.
• Income: Gross (total) income less deductions equal net income (take-home pay).
• Expenditure: Essential items (bills, food) and non-essential (holidays).
• Tax Credits: Money not taxed (e.g., child benefit).

Deductions (from income)

• Statutory deductions: Required by law (e.g., income tax, PRSI).
• Voluntary deductions: Chosen by the individual (e.g., pension, health insurance).

Budget Advantages

• More security, less financial worry.
• Reduces impulse buys
• Identifies areas for overspending.
• Sets a good example for children.
• Money set aside for major bills/seasonal spending.

Savings...

• Where to save: Banks, post office, credit unions.
• Factors to consider: Interest earned, ease of access, security.
• Advantages of saving: Safety, interest,sets a good example, reduces financial stress, plan for unplanned expenses.

Credit

• Definition: Buy now, pay later.
• Types: Credit cards, bank loans, bank overdrafts, hire purchase agreements.
• Other payment methods: Cash, debit card, cheque