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RESOURCE MANAGEMENT AND CONSUMER STUDIES

Purpose of Resource Management

Management is the process of setting and achieving objectives through

the use of resources, i.e., an individual uses what they have, to get what
they want.

Resources
Human……….Family members, hired help etc.
Physical……...Crockery, machinery e.g., dishwasher.
Time Important not to misuse it.
Technical…….Computers.
Money………. Use it wisely.
These differ in some families e.g., one may have more time, less money,
another less time, more money.

Management Systems

Open system -
Interaction with other systems e.g., family with schools, health and social
welfare.
Closed system -
Everything occurs within boundaries e.g., Amish community.

Identification of problems
(need, want or goal)

 
Clarification
of values Feed Back.


identification
of resources
achieving goals
 and evaluating

decision making, planning
and implementation

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The family as a managerial unit.

(use diagram on previous page)

There has to be a manager in the home.

Must have ability to manage Cash Flow:-

Money in = Money out

(Income etc.) ( Bills etc.)
Impulsive shoppers etc., run into problems here.

Organising the home: Time management, otherwise everything is chaotic

e.g.
- No food in the fridge
- No clean clothes
- No proper mealtimes
- Nobody getting up for school/work.

Everybody must contribute – as with a business – to make it work e.g.

multiple goals within a family.
A holiday is needed but somebody for third level education, therefore,
careful financial planning is necessary.
Budgeting on an ongoing basis.
If a meal is to be had, food has to be bought, fuel available, preparation,
cooking and serving of food.
Somebody to organise trades people, health and education etc.

Components of Management
Needs vs. Wants.

Decision Making and Communication

Steps
D - Define Decision - recognise problem
E - Estimate Resources - time, energy, information
C - Consider Alternatives - buying a house - one over another
I - Imagine the consequences of each alternative
D - Develop a plan of action and implement it (implementation)
E - Evaluate the decision.

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Communication

Effective communication will clarify individual perceptions and produce

the co-operation needed to attain goals.
May be verbal or non-verbal e.g. facial expression.
Lack of communication may lead to problems remaining unresolved and
decisions not being made and carried out.

Attributes Affecting Management

Stages in Life Cycle

Young couple with children –
- Both Working.
- Childminding costs.
- Mortgage.
- Child centred holidays.
Couple with teenagers –
- Mortgage.
- No childminding but –
- Grinds, music, sports, clothes, books.
Pre-retirement -
- More disposable income because house is paid
for.
- No college expenses.
- Children gone.
Retirement -
- (a) Enough money put aside for good lifestyle.
- (b) Grand-children
- (c) Good health, hopefully to enjoy (a)

Employment Pattern.
Nowadays, both probably working. A good organised household
(egalatarian) means better quality of life.
Job sharing/Flexitime
Budgeting – travel costs and time.
Some men choose to stay at home (homemaker).

Culture.
Ireland has gender equality – Africa doesn’t. Women in Africa bring
water – a priority. Good food – too much convenience food – Ireland.
Starving or only just enough – Africa. Mexico – women build houses.
Education is as important for women as for men now.
Changes in work practises_____childminders. Religion NB in Ireland

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Values
Values influence what we want to achieve and can change e.g. a small
house will do for a couple - need a larger house when children come. If
education is valued by parents – it probably will be by children.

Gender Roles
Past – woman did cooking/cleaning.
Man did D.I.Y./gardening.
Now – more equality in division of tasks and in participation.

Management of Dual Role

Who’s going to look after children – be parent and work?
Will the better- paid parent work?
Management decisions to be made.

Socio-Economic Status
Address – can influence job prospects.
Education received, job and address influence.
Low Income – choices limited, e.g., holidays.
Changes in socio-economic status can have an influence.
Low to high (Lotto) – many find it difficult to manage.
Vice versa.

Composition of Family
Young children, children have left home, no children, single parent or
step-families will all influence management decisions (planning and
implementation). Families with no children – spare money and time
available. Large numbers of children – less money/space/educational
expenses.
Management of Household Financial Resources

Household as a financial unit

Small financial units, Important in economy, Income provides for

families needs,
Money management skills are essential.
Income provides for needs, wants and luxuries
Income varies from family to family.

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Factors affecting Income

Age
Culture
Gender
Socio-economic status
Number of earners
Dual income family

Sources of household income

Wages and salaries

Pensions
Social welfare
Investments
Child benefit

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MANAGEMENT OF HOUSEHOLD FINANCIAL RESOURSES

Wages
Paid, based on hours worked. 39-hour week. Minimum wage is 8.65euro.
Overtime, or time off in lieu.

Salary
Earn a set amount no matter how many hours they work.

Gross Pay - All money paid

Net Pay - Pay minus tax (P.A.Y.E.), P.R.S.I.
- (maybe) - Pension
- V.H.I./Quinn/Aviva
- Union fees
- Saving schemes
- Mortgage interest relief.

Pension
Money set aside for retirement.
- Contributory Old Age Pension
- Non-contributory Old Age Pension
- Personal Pensions.

Social Welfare Allowance - Benefits

Get similar amounts.
Benefits – P.R.S.I. paid for 39 weeks
consecutively in the previous year.
People with no income and who do not meet this requirement claim
assistance

Payments
Old Age Pension (Contributory) (age 65) Not means tested
Old Age Pension (Non-contributory) (age 66) Means tested
Unemployment Assistance
One Parent Family
Disability

Others
Back to school, carer’s allowance, living alone, maternity benefit (70% of
previous years salary – set maximum and minimum amount).

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Supplementary Welfare

Paid to people who have insufficient means eg. a person waiting for
unemployment assistance etc. May also get rent allowance, medical card
etc

Family Income Supplement

One member of the family must work 19 hours.

Working for 3 months. At least 1 child
Family income below set limits.
If the family qualifies – 60% of the difference between income and set
limit is given.

Universal Payments – child benefit, free travel for O.A.P.’s.

Other Benefits - Fuel Allowance, free electricity, free T.V. licence, free
telephone allowances.

HOUSEHOLD EXPENSES.

Essential expenditure - mortgage, food, clothing etc.

Discretionary - Disposable income – depends on income –
clothes, holidays etc.

Budgeting
Planned spending of income in a sensible way.
(Living within your means).
Advantages
- Reduce family worries
- Security
- Prevents over-spending
- Essentials catered for (bills)
- Encourages saving
- Good example for children

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Preparing a budget

- List all expected net income

- List planned expenditure (mortgage, ‘phone,
E.S.B.) Overestimate rather than underestimate.
- Add up totals – divide by 52
- Set aside money to cover planned spending
- Allow for discretionary spending – Christmas,
birthdays, holidays
- Make provision for personal spending
- Make provision for saving – future education,
pension etc.
- Avoid impulse buying
- Fill in cheque stubs.

Expenditure Patterns
Single Person
No mortgage payments – no dependents.
- Rent shared
- Most money on self, holidays, entertainment
- Some money saved

Family on Low Income/Social Welfare

Money very scarce
- More towards food and fuel
- Rent fixed if in social housing
- Very little surplus for entertainment
- Debt? (for Christmas, Holy Communion etc.)

Family on Higher Income

Money plentiful – spending is more flexible
- Mortgage
- Family has one or two cars
- Children may attend fee paying schools
- Regular family holidays
- Money for luxuries, entertainment and savings

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Allocation of Income:

Housing/Accommodation 16~17% Rent, mortgage, insurance,

maintenance, etc.
Food/Groceries 25% Food supplies should be chosen
with economy and nutritional
value in mind. If a family eats
healthily, minor ailments could
be avoided, thus reducing doctor/
pharmacy costs.
Household Expenses 15% Home comforts are essential, e.g.
heat and electricity, Phone line
rental (some use is essential,
while long chats generally are
not.
Personal Clothing/Footwear 7% Hairdressing, cosmetics, clothes,
shoes, dry-cleaning bills.
Transport 7% Depending what transport is
used for going to work. Cars are
very expensive for those under
25 year of age because of high
insurance. Living near work is
a big saving of both time and
money.
Healthcare 5% Medical expenses can be high,
e.g. visit to doctor/dentist. A
good idea is to have medical
insurance for hospital cover.
Leisure/Recreation 5% Social life, gifts, hobbies,
holidays.
Savings 5% A very important aspect of
budgeting. It helps the
individual to plan for long-
term goals and to be
prepared for the unexpected.

Creche 15%

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Living on a Low Income

Very difficult – particularly if there are children.
Good budgeting practises - essential.

Help from:
 F.I.S.
 M.A.B.S. – Money, Advice and Budgeting Service.(set up in early
1990’s
Dept. of Social, Community and Family Affairs manage M.A.B.S.
M.A.B.S. –
 Help with budgeting
 Help with clearing debt – advice
 Negotiates with creditors
 Account with Credit Union
 On-going support

Credit
Credit ‘Buying Now, Paying Later’
Credit allows consumers to buy goods or services and to repay the money
along with interest and other charges on a regular basis.

Types of credit
Personal and term loans, overdrafts, credit unions, charge cards, credit
cards, store cards, hire purchase, licensed moneylenders, house loans.

Advantages of credit
 Use of goods while paying for them
 Help to meet costs of emergencies
 Can buy large expensive items e.g. home, car
 Can buy luxury items e.g. holiday
 Do not need to save, low initial cost
 Little need to carry large sums of cash
 Credit-free period on budget accounts and credit cards

Disadvantages of credit
 Goods can be repossessed if repayments are not made
 Goods not owned by consumer until final instalment is paid
 Expensive as interest rates are high
 Easy to overspend when buying on credit
 Encourages impulse buying and overspending
 Borrowers might not be able to maintain the repayments

Choosing Credit
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Is it necessary? ( want or need)

Is it affordable (eg mortgage)
How long are the repayments?
Total cost of credit
APR
Deposit required or not
Ca you miss a payment?

Overdraft
 Cheapest form of credit – but only with permission of bank.
 Charge of 25.00euro to set up O.D.
 Current account – short term.
 Not for weak willed, impulse buying or for large purchases (car).

Hire Purchase
 Combination of hiring and buying.
 Has possession.
 Must make repayments and interest.
 Goods can be repossessed.
 Only yours when paid for.

Credit Card
 Credit free period but high interest (18-20%) if not cleared.
 Annual fee and stamp duty (Govt.)
 Not for long term borrowing
 Not for weak willed or impulse buyers

Charge Cards
 Diners Club/American Express
 Must be cleared at the end of the month

Budget Account
 Big stores – Marks and Spencer and Brown Thomas.
 Monthly payment fixed
 Get credit of approx 8 times monthly payment.
 Interest not too high but must buy in one store.

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Legislation (for Credit)

Hire Purchase Act (1946 – 1960)
Hire purchase agreements must identify the agreement as ‘hire purchase’.
The act states that hire purchase agreements must give names and
addresses of the parties, a description of the goods, cash price of goods,
details of hire purchase price, APR – rate of interest being charged.
Instalment arrangements, information on termination of agreement,
recovery of goods (repossession) and details of penalty clauses and
cooling off period.

Consumer Credit Act 1995

The Consumer Credit Act, implemented by the Office of the Director of
Consumer Affairs, deals specifically with credit. It provides protection
for consumers (the borrowers) in relation to consumer loans and credit
agreements, hire purchase and leasing agreements, housing loans and
moneylenders.
All credit advertisements must give the following information:
 Rates of APR and how it is calculated, amount needed for deposit
and instalments, current restrictions in place (if any), security
requirements e.g. deposit, cash price, total cost of credit, instalment
information.
All credit agreements must:
 Be in writing, show the names and addresses of all parties, be
signed by all parties involved, outline costs and penalties that
apply, contain the ten-day ‘cooling-off’ period arrangements.

A copy of the agreement must be given to the consumer on completion or

within ten days of that date. Consumers may withdraw from the
agreement within ten days of receiving a copy of it by providing written
notice to the creditor.

HOUSING FINANCE
Consider - Can you afford to buy or rent?
80% Home ownership in Ireland so a mortgage is a reality for most
people.

What kind of mortgage?

Fixed Rate – no fluctuation in interest rates for a period –
1 year/3year/5year.
Variable Rate – fluctuations in rates. May want the security of fixed rate
for a few years.

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Factors when choosing a mortgage

How much? – 2.5 times applicant’s income and up to 1.25 times second
salary.
How much is the initial payment? - usually 10% (Don’t forget solicitor’s
and valuation fees etc.)
Shop around – interest rates may vary.
Any incentives?
Accelerated payment or early clearing of loan – is there an extra fee?
Can you take a break? (accident etc.).
Can you carry mortgage to new property?

Costs involved in buying a house

Solicitors fees
Deposit (10%)
Surveyors fees
Valuation fees
Insurance (house)
Mortgage protection policy

Sources of Finance
A.I.B., B.of I. , E.B.S., Permanent T.S.B., National Irish Bank,
Ulster Bank, First Active, Local Authority.

Types of Mortgage
Low start mortgage – pay very low rate or no interest for 3-5years.
Annuity mortgage - traditional type( 80% are this type)
Endowment mortgage – life assurance policy and interest paid. Two
payments every month-one to insurance co. And 2nd (interest) to lender.
Pension mortgage – linked to pension. Need a substantial pension.
Usually self-employed/can make large contribution at year end/can use
25% to pay off mortgage

Conditions of borrowing from: -

Local Authority -
Borrower can’t borrow from any other institution.
Takes both incomes into account.
Will give up to 95% of cost of home up to
maximum 126,974euro.
Subject to repayments not exceeding 35% of
net income.

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Shared Ownership may be an option.

40% owned by occupant and 60% by local authority.
This 60% must be bought out in 25 years.
Affordable Housing – first time house buyers. Good
option.
Tenant purchase scheme

Banks & Building Society

Amount borrowed (usually 2-3 times joint income)
Regular saver.(credit record)
Lender holds Title Deeds.
Mortgage agreement shows amount of each
instalment, interest rate, due date and length of loan.
Purchaser pays for surveyor.
Purchaser pays house insurance.
Purchaser pays Mortgage Protection Policy.
Other factors to consider
Deposit, Length of mortgage, Proof of
income(P60),Condition of property

Mortgage Protection Policy -

Decreasing Policy. As mortgage is paid off amount
goes down.
Pays off mortgage if a person dies.
May be linked to Life Assurance.
There is no obligation for the customer to take
out policy with company recommended by bank.
Amount paid depends on: Age
State of health
Smoker?
Joint or single application
Amount of loan

Method of Payment for goods and services (see credit)

Cash
Cheque
Credit Card
Laser Card – like a cheque
Bank Overdraft
Interest Free Credit (E.S.B.)
Saving Stamps (Dunnes)
Direct Debit – regular bills e.g. E.S.B., ‘Phone.

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Selection -
Cash or Credit
Big item or small e.g. Washing Machine or shopping.
Convenience – Direct Debit

Availability -
Income
Money Management.

Saving

Saving – Methods -
Banks and Building Societies
Insurance Co.’s – Pension
An Post
Credit Union

Advantages of Saving –
Sense of security
Interest earned
Helps to avoid debt worries
Easier to get a loan e.g. mortgage.

Considerations –
Rate of Interest
Ease of withdrawal
Security
Convenience
Confidentiality

Banks and Building Societies –

Current A/c – no interest, pay bills etc.
Deposit A/c – very low interest.
Special Savings A/c – slightly higher rate of interest,
leave it for 1-3 months.
P.I.P. - Personal Investment Plan. – nest egg,
Children’s education. Leave
for 7-10 years to get a
good return.

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Credit Union –
Non-profit making. Owned by shareholders. Each
C.U. is autonomous.
DIRT payable interest must be declared by C.U.
Ideal for small savers especially if they want to
borrow.
Reducing interest rate.
Borrowings depend on savings.
Immediate access to money.

An Post - (State guaranteed)

Deposit A/c – very little interest – subject to DIRT.
Saving Certificates – 5years and 6 months
21% interest – Tax Free
Min. invested 64euro – bought in
multiples of 10euro.
Max. 76,184euro.
7 days notice to withdraw.
Saving Bonds - 3 years
10% interest – Tax Free
Min. invested 127euro – in
multiples of 50euro
Max. - same.
7 days notice to withdraw.
Childcare plus Child benefit lodged for 12 months
Left for 5 years
Dirt free

Advantages of An Post –
State guaranteed, no account charges, tax free, very convenient (6 days)

Disadvantages of An Post –
Minimum number of days notice, No A.T.M., cheque deposits take
12 days to clear.

Insurance - P.R.S.I. (Pay Related Social Insurance)

Health Insurance
Household Insurance
Life Assurance

Terminology - Insurance – something that might happen

Assurance – something that will happen

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Premium – money paid – monthly or annually

Policy – the scheme under which one is insured
Policy Document – legal document stating
conditions etc.
Claim – request for compensation
Broker – agent who offers advice and receives
commission on the sale of a policy

P.R.S.I. Paid by all workers over 16 years except low paid

workers, deserted wives and unmarried mothers.
% of gross pay.
Contribution shared (employee and employer).
Enables employees to claim dental benefits and
other social welfare benefits.

Benefits Unemployment Benefit

Contributory Old age pension
Disability Benefit
Dental and Optical Benefit
Maternity Benefit
Occupational Injuries Benefit

Health Insurance
V.H.I.
Quinn
Hibernian aviva
Both cover medical expenses incurred in case of
illness. The more expensive the premium the
better the cover e.g. private rooms,
surgeon’s fees etc.

Advantages Costly, but offers a sense of security

Tax relief claimable

Permanent Health Insurance – pay a policy. Payment if ill.

Household Insurance - Paid annually. Dependant on value of house

and area lived in.
House Insurance - Damage to house by storm, flood, fire.
Contents - Damage to house contents e.g. furniture,
carpets etc.

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All Risks - Covers jewellery etc.

Life Assurance
3 categories.
1. Term Assurance
2. Whole Life
3. Endowment

1. Term Assurance - Cheapest and simplest form. Policy is taken out

for a set term e.g. 20 years. If the insured lives
beyond the term, nothing is paid out.
2. Whole Life - More expensive as there is no time limit i.e.,
when the policyholder dies, the money is paid
to the family.
3. Endowment - Combination of saving and protection. Money
is paid on a regular basis and at the end of a
term money is paid out, depending on what
was invested. If policy is cashed in early,
bonuses will be lost. Expensive form of
assurance.

Other types of Insurance

Car Insurance
Travel Insurance
Salary Protection

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Housing

Factors Affecting Housing Choices

Socio- economic factors
Life circumstances eg income, age, life-cycle
Buying, renting, sharing
Money available (cost of housing)
Type and size of home, maintenance
Location, community, environment, amenities
Ease of access to services eg public transport
Suitability for people with special needs
Proximity to work, family, friends
Potential resale value
National housing policy

National Housing Policy

Government policy to:

Provide proper housing for all
Housing suitable for all family/person. Good environment, in
Place of choice
How is this achieved: Overseeing a national housing programme and
facilitating home ownership, support of social housing projects, low cost
housing sites, tenant purchaser schemes, disabled grants and ensuring
good private rented accommodation.

Trends in housing developments

Improvements to inner city

Developing a commuter belt
Developing satellite towns
Developers must have green areas, etc
Smaller estates
Smaller houses on estates with small gardens

Types of Housing Developments

Private Developments
Schemes of houses
Price varies according to area style, etc
Detached, semi-de or apartments

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Local Authority
Can’t afford mortgage, Houses of varying sizes etc

Private

Own site or purchased site

Planning permission
Building costs may be high due to extra work
Own design.

Socio-Economic Factors
Income level – rent/buy (cost/area)
Local Authority Housing available
Area where house might be bought/rented
Occupation of occupants

Number of Occupants –no longer acceptable to have

overcrowding.
Should have garden for children and playground.
Teenagers may need individual bedrooms.
Elderly will have different priorities – single storey
dwelling, accessibility to shops etc.

Location – Proximity to shops, schools etc.

Does the community offer extra curricular activities
for children?
Will you need a car for all transport?
Aesthetic (view)
Quality of area eg. Ballymun vs Griffith avenue

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Copyright Bernie Slattery at Brookfield College 2010