Lesson Notes By Weeks and Term v5 - Grade 7

Lesson Video

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Performance objectives

• Define income, expenses, and budgets.
• Identify different sources of income.
• Tell the difference between needs and wants.
• Create a simple personal budget.
• Understand why saving is important.

Lesson summary

Financial literacy is about understanding how money works in the real world. It's about making smart choices with your money so you can achieve your goals, whether that's buying new soccer boots, saving for further education, or helping your family. In South Africa, where many people face financial challenges, knowing how to manage money is even more crucial. It helps us avoid debt, plan for the future, and contribute to a stronger economy. This week, we focus on the essential components of financial literacy: income, expenses, and budgets. We’ll explore where money comes from (income), where it goes (expenses), and how to plan its movement (budgets).

Lesson notes

Income: Income is the money you receive. It’s the money that comes in. For a Grade 7 learner, income might come from different sources: Allowance: Money given to you regularly by your parents or guardians.

Pocket Money: Similar to allowance but perhaps less regular and less structured.

Part-time Jobs: Doing small jobs like helping neighbours with gardening, washing cars, or babysitting (if age-appropriate and legal).

Gifts: Money received as gifts for birthdays or special occasions.

Profits from Small Ventures: Selling homemade crafts, snacks at school (if permitted), or offering tutoring services to younger learners.

Example: Lerato receives R50 allowance each week from her mother for doing chores around the house. She also earns R20 each week by helping her neighbour with their grocery shopping. Lerato's weekly income is R50 + R20 = R

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0. Expenses: Expenses are the things you spend money on. It’s the money that goes out. Expenses can be categorized in different ways: Needs vs.

Wants: Needs: Essential things you must have to survive and function.

Examples: food, school uniforms, transport to school, basic toiletries.

Wants: Things you would like to have, but are not essential.

Examples: sweets, new toys, the latest video games, going to the movies every week. Fixed vs.

Variable: Fixed Expenses: Expenses that stay the same each month or week.

Examples: school fees (if paid monthly), transport money (if a fixed weekly amount), airtime if you buy the same amount every month.

Variable Expenses: Expenses that change from month to month or week to week.

Examples: spending money on snacks, movies, data bundles (if usage varies).

Example: Sipho spends R15 each day on transport to school (fixed expense). He also spends about R30 each week on snacks and cool drinks (variable expense). He needs the transport to get to school, but he wants the snacks and cool drinks. He could reduce his expenses by buying fewer snacks.

Budget: A budget is a plan for how you will spend your money. It shows you how much money you have coming in (income) and how much you plan to spend (expenses).

A budget helps you to: Track your income and expenses. See where your money is going. Make informed decisions about spending. Save money. Avoid spending more than you earn.

Creating a Simple Budget: A simple budget can be created using a table: | Category | Income/Expense | Amount (R) | | -------------- | -------------- | ----------- | | Allowance | Income | 50 | | Part-time Job | Income | 20 | | Total Income | | 70 | | Transport | Expense | 15 (daily) x 5 = 75 | | Snacks | Expense | 30 | | Airtime | Expense | 20 | | Total Expenses | | 125 | | Savings | Expense | 0 | | Balance (Income - Expenses) | | -55 | Analyzing the Budget: In the example above, Lerato is spending more than she earns (R70 income vs. R125 expenses). This means she has a negative balance of R

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5. To balance her budget, she needs to either increase her income or reduce her expenses. She could look at reducing the amount she spends on snacks or find another small job to increase her income.

Saving: Saving means setting aside some of your income for future use. Saving is important because it allows you to: Buy things you want in the future (e.g., a bicycle, new clothes). Prepare for unexpected expenses (e.g., needing to buy new school shoes). Reach long-term goals (e.g., saving for university).

Example: If Lerato managed to reduce her snack expenses by R10 per week, she could save that R

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0. Over 10 weeks, she would have saved R100! Guided Practice (With Solutions)

Question 1: Thando receives R40 allowance per week. He spends R25 on airtime, R10 on sweets, and saves the rest. Calculate his savings per week.

Solution: Calculate total expenses: R25 (airtime) + R10 (sweets) = R35 Calculate savings: R40 (allowance) - R35 (expenses) = R5 Answer: Thando saves R5 per week.

Commentary: This question reinforces the basic calculation of savings by subtracting expenses from income. It's a simple, straightforward application of the concepts.

Question 2: Identify whether the following are needs or wants: a) School uniform b) New Playstation game c)

Bread d)

Going to the cinema Solution: a)

School uniform: Need b)

New Playstation game: Want c)

Bread: Need d)

Going to the cinema: Want

Commentary: This question tests the learners’ understanding of the difference between needs and wants. It encourages them to think critically about their spending habits.

Question 3: Zanele has the following income and expenses for the month: Income: R200 allowance Expenses: R80 airtime, R50 transport, R40 snacks. Create a simple budget for Zanele and calculate her balance.

Solution: | Category | Income/Expense | Amount (R) | | --------------- | -------------- | ----------- | | Allowance | Income | 200 | | Airtime | Expense | 80 | | Transport | Expense | 50 | | Snacks | Expense | 40 | | Total Income | | 200 | | Total Expenses | | 170 | | Balance | | 30 | Answer: Zanele has a balance of R30.