Mathematical Literacy Level 2 Module 9

Mathematical Literacy NQF 2 Downloaded from hlayiso.com Maths Lit NQF Level 2

Managing your finances with confidence Module 9 Downloaded from hlayiso.com Maths Lit NQF Level 2

Overview 9.1 Income 9.2 Expenses 9.3 Saving money and budgeting Downloaded from hlayiso.com Maths Lit NQF Level 2

Income Unit 9.1 • Income describes all the money that you receive from all income sources. • Income is classified into 3 types: Fixed Income Variable Income Occasional Income • The difference between the types of income is based on when it is paid to the worker or employee. Downloaded from hlayiso.com Maths Lit NQF Level 2

Fixed Income Unit 9.1 Description This is income that is received regularly and is usually the same value. ” • Salary – paid monthly • Wages – paid weekly or fortnightly • Rental income – renting out property or space • UIF payments • Welfare and government grants • Child support or maintenance • Pensions and annuities Downloaded from hlayiso.com Maths Lit NQF Level 2

Variable Income Unit 9.1 Description This is income that is received regularly but is not of a constant value. It is dependent on the task that has been completed and is often dependent upon hours worked or units of production. • Commission – usually determined by a % of sales in a month ” • Profit – can be paid from a business • Interest earned – dependent on the investment period (days of the month) • Tips and gratuities – received by waitrons and service providers Downloaded from hlayiso.com Maths Lit NQF Level 2

Occasional Income Unit 9.1 Description This is income that is not received regularly and is not of a constant value i.e. it is received as and when, or as a once off occurrence. • Gifts – birthday or wedding gifts ” • Inheritance – money from a deceased relative or an acquaintance • Retrenchment packages – money received from an ex-employer • Unexpected bonuses - usually from an employer Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.1 page 167 Unit 9.1 Anyeso works at a supermarket and is paid on an hourly basis. She receives maintenance for her child and she also bakes cakes to sell. Source of income December January Wages after deductions R5 722 R3 654 Profit from baking and selling cakes R650 R120 Child support maintenance R800 R800 Christmas gift R200 Profit from selling a table she did not need R350 Total income A B a) Calculate Anyeso’s total income for December and January, labelled A and B. Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.1 page 167 continued ... Unit 9.1 Source of income December January Wages after deductions R5 722 R3 654 Profit from baking and selling cakes R650 R120 Child support maintenance R800 R800 Christmas gift R200 Profit from selling a table she did not need R350 Total income A B b) Write down: i) the fixed sources of income ii) the variable sources of income iii) the occasional sources of income. Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.1 page 167 continued ... Unit 9.1 a) A: R7 372 B: R4 924 b) i) Child support maintenance ii) Wages after deductions, profit from baking and selling cakes iii) Christmas gift, profit from selling a table Downloaded from hlayiso.com Maths Lit NQF Level 2

Exercise 9.1 Unit 9.1 Complete Exercise 9.1 on page 168 of your Student’s Book Downloaded from hlayiso.com Maths Lit NQF Level 2

Expenses Unit 9.2 • Expenses are the way that we spend our money • Expenses are classified into three types: Fixed Expenses Variable Expenses Occasional Expenses • These can be divided further into essential and non-essential expenses. Downloaded from hlayiso.com Maths Lit NQF Level 2

Expenses continued ... Unit 9.2 Expenses can be classified by their purpose as essential or non-essential: Essential expenses Non-essential expenses • household and living • entertainment expenses • vacations • loan repayments and taxes • luxury goods • school fees, bank charges and other fees. Note that essential expenses (needs) and non-essential expenses (wants) are different for different people. Downloaded from hlayiso.com Maths Lit NQF Level 2

Fixed Expenses Unit 9.2 Description These can be essential expenses providing for our basic needs, or other compulsory expenses, depending on our sources of income. Examples include: ” • household expenses – rent/bond, water & electricity, security, etc • living expenses – food, clothing which is paid monthly • taxes and insurance • repayments of debt (loans, clothing accounts) Downloaded from hlayiso.com Maths Lit NQF Level 2

Variable Expenses Unit 9.2 Description These are expenses that can be for basic needs, but can also include every non-essentials that vary in cost . month Examples include: ” • clothing and personal grooming items • cellphone charges not included in monthly subscriptions • entertainment costs Downloaded from hlayiso.com Maths Lit NQF Level 2

Occasional Expenses Unit 9.2 Description These are expenses that do not occur on a regular basis and are also not for any fixed amount. Examples include: ” • motor vehicle maintenance and tyres • doctors' accounts • birthday presents • school stationery • unexpected travel Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.2 page 169 Unit 9.2 Jack has been working at a supermarket over weekends for the past three weeks. His expenses since starting his job are: • R99 per week on airtime and data • Taxi fare – R18 per trip to work. He has worked on Saturdays and Sundays • R85 on toiletries • R324 on movies and a burger with his girlfriend • R199 for a new sweater • R78 on snacks and luxuries Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.2 page 169 continued ... Unit 9.2 a) Write down all Jack’s fixed expenses. Give a reason for your answer. b) Write down his variable expenses. Give a reason for your answer. c) Explain why buying a sweater is an occasional expense. d) Explain the difference between essential and non- essential expenses. e) Which of Jack’s expenses are non-essential? Give a reason for each one. Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.2 page 169 continued ... Unit 9.2 a) Taxi fare. If Jack works two days over the weekend, his taxi fare will cost the same every week. b) Airtime and data, toiletries, snacks and luxuries. He will buy these every week, but won’t spend exactly the same amount on each one every week. c) He will not buy a sweater every week. d) Essential expenses refer to money spent on things you need to survive. Non-essential expenses refer to money spent on things you want, but if you don’t have them, you can still manage without them Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.2 page 169 continued ... Unit 9.2 e) Taking his girlfriend to movies and a burger – he could have taken his girlfriend somewhere where he did not have to spend money. An example would be a walk on the beach. Buying a sweater – he could have worn his old sweater. Luxuries and snacks – these are nice to have, but you will not starve if you don’t have them. Downloaded from hlayiso.com Maths Lit NQF Level 2

Exercise 9.2 Unit 9.2 Complete Exercise 9.2 on page 171 of your Student’s Book Downloaded from hlayiso.com Maths Lit NQF Level 2

Saving money and budgeting Unit 9.3 Make a plan to save money that is linked to your income received and your expenses. A plan that shows how much income you get and how much you plan to spend is called a budget. To make a budget that works, we first need to understand saving and budgeting. Saving Budgeting making your money grow the way you spend your money Downloaded from hlayiso.com Maths Lit NQF Level 2

Saving Unit 9.3 This is a skill that everybody needs to learn. Good financial managers know: • how much income they receive • how much expenses they pay out • how to design and implement a good savings plan for their future needs. Downloaded from hlayiso.com Maths Lit NQF Level 2

Interest Unit 9.3 Interest is money that is payable in two ways: • When we borrow money from a bank or other financial institution, we pay interest to the institution. • When we make an investment, we are lending our money to the institution. It pays us interest on the money. The money paid or received is called interest and it can be calculated as simple interest or as compound interest, depending on the loan or investment. Downloaded from hlayiso.com Maths Lit NQF Level 2

Interest continued ... Unit 9.3 Principal Sum The amount of money you borrowed or invested is called the principal sum. Interest is calculated on the principal sum. ” Simple interest is calculated on the principal amount and the amount of interest is the same for each time interval. Simple Interest Interest Compound Compound interest is calculated on both the principal and Interest the previous interest added (or deducted), so the amount is different for each time interval. Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.4 page 174 Unit 9.3 John invested R5 000 in a bank account for 5 years at an interest rate of 7,5% per year. He checked his interest income every year. a) Calculate the interest he earned in Year 1. b) Calculate the interest earned in Year 3. Show all your calculations. c) Explain why John earned more interest in Year 3 than he did in Year 1. d) What was the rate of interest earned? Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.4 page 174 continued ... Unit 9.3 e) Would John earn more or less money if the interest rate was 6,75%? f) For some people, a lower interest rate is an advantage. For others it is a disadvantage. Do you agree? Explain. Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.4 page 174 continued ... Unit 9.3 a) Interest in Year 1 = 7,5% × R5 000 = R375 b) Interest in Year 2 = 7,5% × R5 375 = R403,13 Interest in Year 3 = 7,5% × R5 778,13 = R433,36 c) The previous interest was added to the principal sum in Year 1 and Year 2. Therefore, interest was calculated on a greater principal sum. d) 7,5% per year. e) He would earn less interest. f) It is an advantage if you are paying off a loan, because then the amount of interest you have to pay, is less. It is a disadvantage if you have an investment, because then the amount of interest you earn is less. Downloaded from hlayiso.com Maths Lit NQF Level 2

Budgeting Unit 9.3 A good budget must be: accurate: reflect the actual income and expenses realistic: not include fictitious income or expenses detailed: include the details of who receives the money balanced: income and expenditure must be equal adaptable: if circumstances should change, it should be easy to make adjustments. Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.5 page 175 Unit 9.3 Mrs Jacobs is a divorced mother of three children and earns a nett salary of R14 260 per month after deductions. The children’s father regularly pays child support maintenance. Mrs Jacobs’s budget shows her monthly income and expenses. Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.5 page 175 continued ... Unit 9.3 Monthly income Monthly expenses Gross salary (salary before deductions) R16 650 Taxes A Child support maintenance R2 700 Rent R3 250 Electricity R1 400 Transport R850 Car repayment R1 945 Clothing account R260 Furniture store account R345 School fees R360 Airtime R800 Internet contract R500 Children’s pocket money R300 Entertainment R600 Emergencies and unplanned expenses R500 Household insurance R230 Education policy R300 Total B Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.5 page 175 continued ... Unit 9.3 a) Calculate: i) Mrs Jacobs’s monthly tax payment (A) ii) Her monthly income iii) Her total expenses (B). b) List two fixed expenses. Give a reason why you say these are fixed expenses. c) List two variable expenses. Give a reason why you say these are variable expenses. d) How would you describe emergencies and unplanned expenses? e) Give one example of an unplanned expense that Mrs Jacobs could have. Downloaded from hlayiso.com Maths Lit NQF Level 2

Projected and actual expenses Unit 9.3 When drawing up a budget we usually consult the actual expenses from the previous budget period i.e. if we spent R950,00 on electricity last month, we can either budget (project) for the next month for it to: • remain constant at R950,00 or • we could project that it will increase to R1 000,00. Downloaded from hlayiso.com Maths Lit NQF Level 2

Example 9.8 page 178 Unit 9.3 Downloaded from hlayiso.com Maths Lit NQF Level 2

Exercise 9.3 Unit 9.3 Complete Exercise 9.3 on page 180 of your Student’s Book Downloaded from hlayiso.com Maths Lit NQF Level 2

Module assessment Module 9 Complete Module assessment on page 187 of your Student’s Book Downloaded from hlayiso.com Maths Lit NQF Level 2

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