Lesson Notes By Weeks and Term v5 - Grade 10

Lesson Video

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Performance objectives

• Define income and expenses.
• Create a simple personal or household budget.
• Interpret basic payslips and bank statements.
• Calculate total income and expenses.
• Identify the difference between a surplus and a deficit.

Lesson summary

Overview: Welcome to Mathematical Literacy Grade 10! This week, we're diving into the world of personal and household finance. Understanding how to manage your money effectively is crucial, not just for your future, but also for making informed decisions today. In South Africa, where many households face economic challenges, financial literacy is an essential life skill. This topic will empower you to make informed decisions about budgeting, saving, spending, and understanding basic financial concepts that directly affect your life and your family.

Lesson notes

A. Income: Income is the money you receive on a regular basis. Understanding your income is the first step to managing your finances.

Salary: A fixed amount of money paid to an employee, usually on a monthly basis. Salaries are typically associated with professional jobs. For example, a teacher might earn a salary of R25,000 per month.

Wages: Money paid to an employee based on the number of hours worked. Wages are often paid weekly or bi-weekly. For example, a shop assistant might earn R30 per hour.

Grants: Money given by the government or an organization, usually for a specific purpose. Examples in South Africa include the Child Support Grant, the Old Age Pension Grant, and NSFAS bursaries for tertiary education.

Allowances: A sum of money given regularly for a specific purpose. For example, pocket money from parents, or a travel allowance from an employer.

Other Income: This could include money from selling goods (e.g., selling crafts at a market), rental income from a property, or interest earned on savings.

B. Expenses: Expenses are the costs you incur on a regular basis. Knowing where your money goes is just as important as knowing where it comes from.

Fixed Expenses: These are expenses that remain the same each month, regardless of your consumption.

Examples include: Rent or bond repayments School fees Insurance premiums (e.g., car, life, medical aid)

Loan repayments Variable Expenses: These expenses change from month to month, depending on your usage and choices.

Examples include: Groceries Electricity Water Transport (e.g., petrol, bus fare)

Entertainment Discretionary Expenses: These are non-essential expenses that you can choose to spend money on or not.

Examples include: Eating out Movies New clothes (beyond essential items) Hobbies

C. Budgeting: A budget is a plan for how to spend your money. It helps you track your income and expenses, and make informed decisions about your finances. A budget helps you avoid overspending and allows you to save towards financial goals.

Steps to Creating a Budget: Calculate your total income: Add up all your sources of income for a specific period (e.g., a month).

List your expenses: Identify all your fixed, variable, and discretionary expenses.

Estimate your variable expenses: For variable expenses, look at past bills or receipts to estimate your average spending.

Calculate your total expenses: Add up all your expenses.

Calculate the difference: Subtract your total expenses from your total income.

Surplus: If your income is greater than your expenses, you have a surplus. This means you have money left over that you can save or invest.

Deficit: If your expenses are greater than your income, you have a deficit. This means you are spending more than you earn, and you need to find ways to reduce your expenses or increase your income.

D. Financial Documents: Understanding financial documents is key to managing your money.

Payslip: A payslip shows your gross salary (total earnings before deductions), deductions (e.g., PAYE tax, UIF, medical aid), and net salary (take-home pay).

Bank Statement: A bank statement shows all the transactions in your bank account for a specific period, including deposits (money coming in), withdrawals (money going out), and bank charges.

E. Worked

Examples: Example 1: Calculating Total Income Sipho works as a waiter and earns R25 per hour. He works 30 hours per week. He also receives a monthly Child Support Grant of R510 for his younger sister. Calculate his total monthly income, assuming there are 4 weeks in a month.

Solution: Weekly wage: R25/hour * 30 hours/week = R750/week Monthly wage: R750/week * 4 weeks/month = R3000/month Total monthly income: R3000 (wage) + R510 (grant) = R3510 Example 2: Creating a Simple Budget Thandi earns R2000 per month from her part-time job.

Her monthly expenses are: Rent: R500 Transport: R300 Groceries: R600 Entertainment: R200 Cell phone: R150 Create a budget for Thandi and determine if she has a surplus or a deficit.

Solution: Total income: R2000 Total expenses: R500 + R300 + R600 + R200 + R150 = R1750 Difference: R2000 (income) - R1750 (expenses) = R250 Thandi has a surplus of R250 per month. She can save this money or use it for other purposes.

Example 3: Analyzing a Payslip Lerato's payslip shows the following information: Gross Salary: R8000 PAYE (Tax): R1500 UIF (Unemployment Insurance Fund): R80 Medical Aid: R500 Calculate Lerato's net salary.

Solution: Total deductions: R1500 + R80 + R500 = R2080 Net salary: R8000 (gross salary) - R2080 (deductions) = R5920 Lerato's net salary is R

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0. This is the amount she receives in her bank account. Guided Practice (With Solutions)

Question 1: John earns a salary of R5000 per month. He also receives a travel allowance of R1000 per month.

His expenses are: rent (R1500), groceries (R1000), transport (R800), and entertainment (R500). Calculate John's total income and total expenses. Does he have a surplus or a deficit?