Income Types and Expenditure Patterns

Income Types

• Non-financial income: Refers to goods or services a household receives without exchanging money. Examples include self-performed tasks (e.g., home repairs), self-produced goods (e.g., vegetables), and received benefits (e.g., free food, accommodation).

• Financial income: Refers to the money (in South African Rand) a person or household receives within a specific period (e.g., monthly, weekly).

Expenditure Patterns

• Factors influencing expenditure patterns:

  • Socio-economic Position:

    • Low income groups primarily spend on basic necessities.
    • Middle income groups have more disposable income for food, education, housing, and lifestyle improvements.
    • Middle-high income groups allocate more spending to luxury goods and services.
    • **High income groups ** indulge in wants and ultra-luxury items.

  • Household Type and Family Cycle:

    • Families with children dedicate a significant portion of their income to school fees, coaching, transport, and activities.
    • Families with grown children have more discretionary income for personal interests, like travel and hobbies.
    • Young independent individuals prioritize spending on entertainment and hobbies.

  • Age:

    • Individuals aged 20-24 may spend more on electronics, home appliances, and entertainment.
    • Individuals aged 45-48 might allocate more funds for vacations.

  • Peer Pressure and Media Influence:

    • Both peer groups and media exert an influence on how different age groups spend their money.

  • Other Factors:

    • Cultural/Population Groups: Cultural and religious practices affect the types of products and services people choose.
    • Residential Area: The cost of living in a specific area influences spending patterns. For instance, expensive areas have higher costs for property tax, home insurance, and maintenance.
    • Inflation: Rising inflation reduces purchasing power, leading to decreased spending on luxury items.

Explore the differences between non-financial and financial income, and understand how socio-economic position and household type influence expenditure patterns. This quiz covers key concepts related to household income and spending behaviors.