NCV 2 Mathematical Literacy Hands-On Training Module 2

Finances

Mathematical Literacy 2Future Managers 1

Income, Expenses and Financial Planning

Mathematical Literacy 2

Mathematical Literacy pg 48

Future Managers 2

Finance

• Income, expenses and financial planning

• Read financial information and make decisions


Identify, record and manage your income

• Income is the money that you have earned during a specific period, either by selling your own goods and services or working for a wage or salary

• Salaries are paid on a monthly basis

• Wages are paid per hour


Gross and Net Income• Gross Income is that amount of money that you

will cost the company

• Net Income is the amount of money that you will receive

• The difference is made up of taxes, medical aid, pensions, unemployment taxes (for wage workers) etc


Fixed Income• Salaries and Wages

• Income from property


Variable Income

• Commission earned

• Interest received on investments

• Tips in the case of waiters or waitresses


Expenses• Expenses is the collective name for all the things

that you spend money on


Fixed Expenses• Occur every month. Don’t generally change

much from month to month

• Examples– Rent– Loan repayments– Hire purchase agreements


Variable expenses• Change from month to month• You generally have more control over variable

expenses• Examples:

– Electricity– Haircuts– Entertainment– Food



Future Managers 10

Recording your income and expenses

• Record where your income and expenses are going• Tips for keeping record

– Keep a notebook handy and write down immediately what you bought

– Collect a till slip for each payment

– Record the amount that you take with you when you go out, and what you have left at the end

– Use bank statements


Saving• Reasons for saving

– Avoid financial worries– Keep out of debt– Retirement– Have interest working in your favour, rather than

against you


How can I save?• Buy necessities first and luxuries last• Take advantages of benefits available• Budget carefully and plan in advance• Get the best quality for the lowest price• Try to get what is needed without spending your money

on it• Negotiate prices and ask for discounts• Don’t buy on debt. Save until you have enough money


How interest rates are calculated

• Interest is the amount that the bank pays into your account

• They are calculated as a percentage of the amount in you account

• A 10% interest rate means that if you keep R100 in your bank account, you will get R10 back per year


Ways of Saving• Joining your employer’s pension of provident

fund• Putting your money in a savings account• Joining a savings club or stokvel• Taking out insurance to cover losses to yourself

and your possessions• Put away amounts into a less accessible interest

earning account


Frequently Asked Questions• Isn’t it better to buy now and save on increased

costs later?• Can buying on credit help me?• Cana I on paying off my load or making down

payments?• What is inflation?• What are stokvels?• What are Pyramid Schemes?


Income Statement

• An income statement provides a history of your financial matters. It reports on how much you have earned and what you did with it

• A basic income statement should:– Group together all income items and total them

– Group together all expense items and total them

– Deduct the total expenses from the total income to indicate the net income for the period



Future Managers 17


Income Statement for previous month (March)

IncomeSalary of father

Salary of motherInterest earned

R5 600,00R 1950, 00

R44, 66R7, 595,00

R2 050,00

R 400,00

R300,00

R265,00

R250,00

R 146,00

R265,00

R480,00

R2 850,00

R250,00

R300,00

ExpensesFixed Expenses

Monthly rent

Insurance and funeral policies

Transport by taxi

School fees for younger sister

Variable Expenses

Clothes

Medical

Water and electricity

Telephone

Food and household goods

Savings

Entertainment

R7 556,00

Net Income (Income less expenses) R39,00Future Managers 18

Budgeting

• A budget is an estimate of expected income and expenditure done on a monthly basis for an individual or household

• Actual income and expenses are recorded accurately and then used to plan for future income and expenses

• A budget is a summary of all your projected earnings and expenses in the immediate future

• A budget helps you avoid debt• A budget provides motivation and control• All business and even the country uses budgets



Future Managers 19

Read Financial Information and Make Decisions


Finance• Income, expenses and financial planning

• Read financial information and make decisions


Financial Documents


Financial DocumentsFinancial Documents

Bank Statement

Bank Statement

Deposit Slip

Deposit Slip

Pay SlipPay Slip QuotesQuotes

Utility BillUtility Bill ReceiptReceipt AccountsAccounts ChequeCheque

Future Managers 22

Bank Account

• A bank account is a safe storage to deposit a salary as it is earned

• Any cheque payments received have to pass through a bank account

• Your salary will be deposited into your bank account

• You earn interest on money in your account• Banks charge you for every transaction on your

account• Before opening an account compare the costs

between banks


Bank Charges• All banks charge for the administrative work that

they do with regard to your money• ATM transactions are cheaper than counter

transactions• Internet and cell phone banking is cheapest, but

requires a monthly payment and internet access


Types of Bank Accounts• Current account – more expensive to operate

than savings account but gives you access to cheques, no interest

• Savings account – collects interest, withdrawals from ATM or debit card

• Fixed deposit – requires you leave your money in the bank for a fixed period, earns higher rates than a savings account


Reading your bank statement

• Banks issue statements, usually on a monthly basis

• They include debits (expenses) and credits (income)

• They should be self-explanatory



Wonder Bank LtdBank statement from: 17/05/07 to 31/06/07

23 Factory RoadBIESIESFONTEIN 5066

Savings AccountMr Sipho MkizeApartment 67BiesieshofBiesiesfontein 5061

Date Branch Description Funds In Funds out Balance (R)

1705/07 Biesiesfontein Str Cash dep 100,00 B/f 0.00

19/05/07 Biesiesfontein Str Cheque dep 200,00 100,00

19/05/07 Head Office Electronic dep 5000,00 2 100,00

31/05/07 Head Office CR Interest 25,63 7 100,00

31/05/07 Head Office Monthly fee 2,00 7 125,63

30/05/07 Head Office Cr interest 59,58 7 123.63

30/06/07 Head Office Monthly fee 2,00 7 183,61

10/07/07 Pick ‘n Pay PNP P&C free 435,87 7 181,21

10/07/07 Pick ‘n Pay PNP purch CB fee

0,55 6 745,34

19/07/07 Head Office Electronic dep 5 000,00 6 744,79

25/07/07 Biesiesfontein Str Cheque dep 535,00 ?

26/07/07 ATM FonteinStr Cash Withdrawal 500,00 ?

31/07/07 Head Office Monthly fee 2,00 ?Future Managers 27

Cheques

• A cheque is a safe way of paying a large amount of money

• It costs a lot of money to write a cheque


Writing Cheques

• The date must be filled in correctly– Post dated means it cannot yet be cashed– Stale means that the cheque is older than three months

• The amount must be written in words as well as numbers

• Cents can be filled in as a fraction• The signature must be of the account holder• Crossed Cheque• Cheque stubs – for personal record



Crossed Paid to

Signature

Amount written out in full

Future Managers 30

Deposit Slip


Deposit Slip

• The following information is required:– Date

– Person who receives the deposit

– Your account number

– The depositors name

– Contact number of the depositor

– Signature

– Cash details – total amount in notes and coins

– Cheque details


Pay Slip


Sparkie Welders (Pty) LtdEmployee name: Mr B. Mokoena

Walter Sisulu DriveBotshabelo3488

ID no: 686070068092Payment date: 25/04/08

Part time hours Earnings Deductions25,50 4011,15 Tax: 1002,79

UIF: 40,11

Nett Pay2968,25

Future Managers 33

Pay Slip• Information that must appear:

– Employer and employee details– Salary amount– Taxable amount– UIF contribution– Company contributions– Leave due


Receipts


Receipts• A receipt is evidence of payment

• These should be kept for personal records and for tax purposes


Utility Accounts


Utility Accounts• Utility accounts are for services that the local

municipality provides

• They must be paid monthly

• The more you use, the higher the rate per unit


Utility Accounts

• The following information will appear on a utility account:– Your details– Type of service– Rate– Usage– Free amount– Date of the reading– Outstanding amount– Amount payable


Retail Accounts


Retail Accounts• Allows you to buy from the shop on credit

• Designed to encourage loyalty to the shop

• Charge interest

• Payments are made monthly


Travel Costs

• Travel costs generally make up a significant part of our daily expenses

• It is generally cheaper to buy a monthly ticket for public transport

• However, there is a risk of losing the ticket


National Credit Act

• Aims to protect the customer against unfair and unlawful credit provision

• Aims to educate customers about their rights

• Applies to all credit agreements


Benefits of the NCA

• Ban negative marketing• Will hear complaints about credit providers• Hand out penalties to credit providers• Issue an order to declare the details of the agreement on

your behalf• Provides you information before entering into a credit

agreement• Requires a credit provider to give you a quotation• Credit providers must show all the costs• Credit providers must inform you that they are going to

give negative information to the credit bureau• Credit bureaus must give you a copy of your credit record

on request


NCA• Credit providers must ask you for the following

information:– Pay slip– ID Document– List of existing debt with other credit providers– A personal budget– A utility bill– A declaration of financial ability


Date post:	16-Nov-2014
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NCV 2 Mathematical Literacy Hands-On Training Module 2

Education