Question

List the four types of financial decisions that households must make and a definition/explanation of each (8 pts.):

1.)____________________________________________________________________________

2.)____________________________________________________________________________

3.)____________________________________________________________________________

4.)____________________________________________________________________________

Answer 1

1). Monthly household expenses - The regular expenses related to food, upkeep of the house, utilities payment, fuel/maintenance for vehicles, entertainment, etc. are some regular financial decisions which have to be taken.

2). Education related expenses - Families have to decide on the kind of education they want the children to have and how much is it going to cost. Savings arrangements for that have to be made.

3). Mortgage payment - If a family has bought a house on mortgage then mortgage is a major financial decision which has to be taken depending on family income, expenditure and how much monthly payment can be made for paying off the mortgage.

4). Retirement savings - Couples have to decide on retirement plans and keeping in mind their longevity and retirement expenses, have to accordingly plan for retirement by making saving arrangements.