Lesson Notes By Weeks and Term v5 - Grade 7

Lesson Video

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Performance objectives

• Define income, expenses, and budget
• Identify different sources of income
• Categorise expenses into needs and wants
• Create a simple personal budget
• Explain the importance of saving

Lesson summary

This week, we're starting our journey into the exciting world of Financial Literacy! Knowing about income, expenses, and budgets isn't just something for adults. It's a crucial skill for everyone, especially as you grow up in South Africa.

Think about it: How will you manage your pocket money? What happens when you start earning money from chores or part-time jobs? Understanding money now will help you make smart choices later, whether you're saving for a new phone, planning a trip, or even thinking about starting your own business one day. In a country like South Africa, where many families face financial challenges, good money management skills can make a real difference.

Lesson notes

Let's break down the key concepts: Income: Income is the money you receive. It's what you earn or are given. For a Grade 7 learner in South Africa, income might come from: Pocket Money: This is a regular amount of money your parents or guardians give you, usually weekly or monthly.

Allowance for Chores: Some families pay children for doing specific tasks around the house, like washing dishes, cleaning the yard, or helping with gardening.

Gifts: Money you receive as presents for birthdays, Christmas, or other special occasions.

Part-Time Jobs: Although less common at this age, some learners might earn money by helping neighbours with tasks like babysitting, pet-sitting, or delivering pamphlets.

Small Business Ventures: Selling sweets or snacks at school (with permission, of course!)

Expenses: Expenses are the things you spend money on. Expenses can be divided into two main categories: Needs: These are things you must have to survive and live comfortably.

Examples include: Food: A healthy and balanced diet is essential. This includes staples like maize meal, rice, bread, vegetables, and protein sources like chicken or beans.

School Supplies: Pens, pencils, notebooks, textbooks, and school uniforms are necessary for your education.

Transport: If you need to take a taxi or bus to school, that's a need.

Basic Healthcare: While South Africa has public healthcare, sometimes you need to buy basic medicines like pain relievers or bandages.

Wants: These are things you would like to have, but you can live without them.

Examples include: Toys and Games: Video games, action figures, dolls, and board games.

Movies and Entertainment: Going to the cinema or attending concerts.

Snacks and Sweets: Chocolates, chips, and fizzy drinks are often wants, not needs. (Remember to eat healthy options too!)

Latest Fashion: Expensive clothes or shoes that are not essential for warmth or protection.

Airtime/Data: Above and beyond what is needed for essential communication. It's crucial to understand the difference between needs and wants. This helps you make informed spending decisions and prioritise what's truly important.

Budget: A budget is a plan for how you will spend your money. It helps you track your income and expenses to ensure you're not spending more than you earn and to help you save towards your goals. It helps you stay in control of your finances.

Creating a Budget: To create a budget, follow these steps: List your income: How much money do you receive each week or month?

List your expenses: What do you spend your money on?

Categorise your expenses: Are they needs or wants? Calculate your total income and total expenses: Add up all your income and then add up all your expenses.

Compare your income and expenses: Is your income greater than your expenses? If so, you have a surplus. If your expenses are greater than your income, you have a deficit, and you need to adjust your spending.

Adjust your spending (if needed): If you have a deficit, you need to reduce your spending, perhaps by cutting back on wants.

Allocate funds for savings: Always try to save a portion of your income, even if it's a small amount.

Worked example

Example 1:

Sipho receives R50 pocket money each week. He spends R20 on airtime, R15 on sweets, and R10 on a magazine. Create a simple budget for Sipho.

Income: R50

Expenses:

Airtime: R20 (Need/Want - Depends on usage. Assuming it is mainly for socialising, categorize as WANT)

Sweets: R15 (Want)

Magazine: R10 (Want)

Total Expenses: R20 + R15 + R10 = R45

Surplus: R50 (Income) - R45 (Expenses) = R5

Sipho has a surplus of R5, which he could save.

Example 2: