Lesson Notes By Weeks and Term v5 - Grade 6

Lesson Video

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Performance objectives

• Define budget, income, expenses, savings, and debt.
• Create a simple budget.
• Tell the difference between needs and wants.
• Understand what debt is and how to avoid it.
• Learn the importance of giving back to the community.

Lesson summary

Managing money wisely is a crucial life skill, especially in a country like South Africa where many people face economic challenges. Understanding how to budget, save, spend responsibly, and avoid debt can significantly improve learners' financial well-being, both now and in the future. This lesson aims to equip Grade 6 learners with the foundational knowledge and skills to make informed financial decisions. By learning these skills now, learners can develop habits that promote financial security and independence later in life. This also empowers them to be active and informed participants in the South African economy.

Lesson notes

a)

Budget: A budget is a plan for how you will spend your money. It helps you keep track of your income and expenses, ensuring that you don't spend more than you earn. Think of it like a map for your money! b)

Income: Income is the money you receive regularly. This could be from an allowance, chores, gifts, or even pocket money. For older people, income comes from salaries or business profits. c)

Expenses: Expenses are the things you spend money on.

There are two main types of expenses: Needs: These are things you must have to survive and live a healthy life. Examples include food, shelter (like rent or mortgage payments), clothing, transportation to school or work, and healthcare.

Wants: These are things you would like to have, but you can live without them. Examples include toys, video games, eating out at restaurants, expensive clothes, and the latest gadgets. d)

Savings: Savings are the money you set aside for future use. This could be for a specific goal, like buying a new bicycle, or for unexpected expenses, like medical bills. Saving is a crucial part of financial well-being. e)

Debt: Debt is money you owe to someone else. This can include loans, credit card bills, or even borrowing money from a friend or family member. Debt can be a serious problem if it's not managed carefully, as you will have to pay it back with interest. f)

Interest: Interest is the extra money you pay on top of the original amount when you borrow money (debt). It's the cost of borrowing money. Similarly, banks sometimes pay you interest on your savings, rewarding you for keeping your money with them. g)

Giving Back: Financial literacy also involves understanding the importance of contributing to the community. This can be done through donating money to charities, volunteering time to help others, or participating in initiatives that benefit society.

Worked example

Example 1: Needs vs. Wants

Scenario: Ayanda receives R100 per month as an allowance. She wants to buy a new soccer ball (R80) and needs to buy a school lunch for the week (R50).

Analysis: The school lunch is a need because Ayanda needs to eat to stay healthy and learn at school. The soccer ball is a want because she can still play soccer with her old ball or borrow one from a friend.

Solution: Ayanda should prioritize buying the school lunch (R50). This leaves her with R

5

0. She could save this towards the soccer ball or explore cheaper alternatives.

Example 2: Creating a Simple Budget

Scenario: Sipho earns R50 per week doing chores for his family. He wants to create a budget.

Steps:

Income: R50

Expenses:

Snacks: R20

Bus fare: R10 (if needed)

Savings: R20 (R50 – R20 – R10 = R20)

Sipho's Budget: Sipho plans to spend R20 on snacks and save R20 each week. The R10 bus fare is only used when necessary, otherwise the remaining money also goes to savings.

Explanation: The bus fare is considered a variable expense while the snacks and savings are fixed expenses (decided beforehand).

Example 3: Understanding Debt

Scenario: Zanele borrows R30 from her friend Thabo to buy sweets. Thabo says she needs to pay him back R35 next week.

Analysis: Zanele is in debt. The original amount she borrowed (R30) is the principal. The extra R5 she has to pay is the interest.

Solution: Zanele needs to make sure she has R35 available next week to repay Thabo. If she doesn't, she needs to communicate with Thabo and arrange a payment plan.

Guided Practice (With Solutions)

Question 1: Define the following terms in your own words: income, expenses, and savings.

Solution:

Income: The money you receive regularly.

Expenses: The things you spend money on.

Savings: The money you set aside for future use.

Commentary: This question tests basic understanding of the core concepts.

Question 2: Lerato receives R200 as a birthday gift. She wants to buy a new pair of shoes for R150 and a book for R

8

0. Is this possible? Should she buy both?

Solution:

Total cost: R150 + R80 = R230

Lerato only has R200, so she cannot buy both items.

She needs to prioritize. Are the shoes or the book more important? She should consider if she needs new shoes, or if it is just something she wants.

Commentary: This question applies budgeting principles to a realistic scenario, forcing prioritization.

Question 3: Thando wants to save R500 to buy a new bicycle. He earns R50 per week doing chores. How many weeks will it take him to save enough money if he saves all his earnings?

Solution:

Weeks to save: R500 / R50 = 10 weeks

It will take Thando 10 weeks to save enough money.

Commentary: This question introduces a simple savings goal calculation.

Question 4: Identify three ways you can save money.

Solution:

Pack your own lunch instead of buying from the tuck shop.

Borrow books from the library instead of buying them.

Walk or cycle to school instead of taking the bus (if safe to do so).

Commentary: This requires learners to think practically about their spending habits.

Independent Practice (Questions Only)

Question 1: List three examples of needs and three examples of wants.

Question 2: Maria earns R300 per month. She spends R100 on transport, R50 on snacks, and saves R

1

0

0. How much money does she have left?

Question 3: Explain in your own words what debt is and why it is important to avoid it.

Question 4: You want to buy a toy that costs R

1

2

0. You earn R30 per week. How many weeks will it take you to save enough money? What if you only save half of your earnings each week?

Question 5: Suggest three ways a family can save money on their electricity bill.

Question 6: Imagine you won R1000 in a competition. Create a budget for how you would spend or save the money, including a portion for giving back to the community. Show amounts and descriptions.

Question 7: What does interest mean when borrowing money?

Question 8: List some ways to give back to your local community.