MAJOR COSTS
Establishment costs. These are one-off costs that are involved in setting up your new place. Typical establishment costs include the rental bond, telephone connection, essential white goods such as a refrigerator and washing machine, and furniture.
Ongoing costs. These are costs that are recurring. Typical ongoing costs include rent, electricity, gas, water, telephone, groceries and travel expenses
AVOIDING FINANCIAL PROBLEMS
Household insurance
Establishment costs. These are one-off costs that are involved in setting up your new place. Typical establishment costs include the rental bond, telephone connection, essential white goods such as a refrigerator and washing machine, and furniture.
Ongoing costs. These are costs that are recurring. Typical ongoing costs include rent, electricity, gas, water, telephone, groceries and travel expenses
AVOIDING FINANCIAL PROBLEMS
- Each person in the house/flat pays a set amount into a central fund called a kitty. This is then used to pay the bills associated with the whole group; for example, food, rent, gas and electricity.
- The telephone can be a problem. The best solution is to use your own mobile phone.
- A set of rules is drawn up. These would cover things such as a roster for cooking and cleaning. However, it should also cover what happens if the electricity and gas bills are higher than the amount available in the kitty.
- Everyone should have a budget. This includes people sharing a house, someone living alone or a married couple. This will ensure that they are able to meet any expenses as they occur.
- Each person should also try saving money for a personal goal such as a holiday, a new car, a house or to invest for retirement
- HOUSEHOLD BUDGETS
- A simple household budget shows the expected income, the main expenses and the remaining funds, if any, that can be saved each month.
Household insurance
- Home insurance covers a home against damage and destruction from causes such as storms, fire or accidental explosions
- It is very important that the inclusions and exclusions are very carefully noted; for example, most policies will not cover flood damage.
- Home contents insurance — provides compensation if your home’s contents (such as furniture) are damaged or stolen
- Life insurance — the most common form of life insurance is term insurance. This policy covers a person for a set time. If the person dies within this time span, the insurance company will pay a specified amount to the next of kin or other nominated person.
- Sickness and accident insurance — usually taken out by self-employed people who are not covered by workers’ compensation and do not receive pay for sick leave. It provides cover if a person cannot work and thus receive their normal income.
- Health insurance — in Australia, everyone is covered for basic medical costs by a government health insurance scheme called Medicare. However, if people wish, they may take out additional private health insurance cover to provide special benefits, such as orthodontic expenses.
Main Items to be Purchased
Buying a car
PROCESSES INVOLVED IN PURCHASING MAJOR ITEMS
- Buying a car is the second largest purchase a person makes during their life, with the largest being a house
- The ownership of a car involves two types of costs
- Initial costs such as stamp duty and delivery charges
- Recurring costs such as insurance, registration, servicing and fuel
PROCESSES INVOLVED IN PURCHASING MAJOR ITEMS
- Cash or credit are the two ways of purchasing goods
- Advantages are that you instantly receive the good, avoid debt and can possibly negotiate discounts However, it has disadvantages such as having to wait until you have saved sufficient funds to purchase the good and the inconvenience of carrying large sums of money.
- There are three ways of paying with cash:
- Using notes and coins
- With a debit card such as the Commonwealth Bank Keycard or the Westpac Bank Handycard.
- These cards allow you to buy goods by electronically transferring money out of your bank account and into the stores
- Using credit cards such as VISA or Mastercard
- These have a low annual fee, low interest rates and rewards programs
- Lay-by where you pay a deposit for a good and then make weekly payments until the full amount has been paid