Finances Mathematical Literacy 2 Future Managers 1
Nov 16, 2014
Finances
Mathematical Literacy 2Future Managers 1
Income, Expenses and Financial Planning
Mathematical Literacy 2
Mathematical Literacy pg 48
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Finance
• Income, expenses and financial planning
• Read financial information and make decisions
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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
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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
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Fixed Income• Salaries and Wages
• Income from property
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Variable Income
• Commission earned
• Interest received on investments
• Tips in the case of waiters or waitresses
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Expenses• Expenses is the collective name for all the things
that you spend money on
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Fixed Expenses• Occur every month. Don’t generally change
much from month to month
• Examples– Rent– Loan repayments– Hire purchase agreements
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Variable expenses• Change from month to month• You generally have more control over variable
expenses• Examples:
– Electricity– Haircuts– Entertainment– Food
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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
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Saving• Reasons for saving
– Avoid financial worries– Keep out of debt– Retirement– Have interest working in your favour, rather than
against you
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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
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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
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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
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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?
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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
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Mathematical Literacy 2
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
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Read Financial Information and Make Decisions
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Finance• Income, expenses and financial planning
• Read financial information and make decisions
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Financial Documents
Mathematical Literacy 2
Financial DocumentsFinancial Documents
Bank Statement
Bank Statement
Deposit Slip
Deposit Slip
Pay SlipPay Slip QuotesQuotes
Utility BillUtility Bill ReceiptReceipt AccountsAccounts ChequeCheque
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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
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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
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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
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Reading your bank statement
• Banks issue statements, usually on a monthly basis
• They include debits (expenses) and credits (income)
• They should be self-explanatory
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Mathematical Literacy 2
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
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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
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Crossed Paid to
Signature
Amount written out in full
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Deposit Slip
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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
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Pay Slip
Mathematical Literacy 2
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
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Pay Slip• Information that must appear:
– Employer and employee details– Salary amount– Taxable amount– UIF contribution– Company contributions– Leave due
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Receipts
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Receipts• A receipt is evidence of payment
• These should be kept for personal records and for tax purposes
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Utility Accounts
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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
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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
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Retail Accounts
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Retail Accounts• Allows you to buy from the shop on credit
• Designed to encourage loyalty to the shop
• Charge interest
• Payments are made monthly
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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
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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
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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
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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
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