Accompanying slide show - NCV 2 Mathematical Literacy Hands-On Training published by Future Managers (www.futuremanagers.net)

1. Finances
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2. Income, Expenses and
Financial Planning
Mathematical Literacy pg 48
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3. Finance
• Income, expenses and financial planning
• Read financial information and make decisions
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4. 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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5. 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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6. Fixed Income
• Salaries and Wages
• Income from property
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7. Variable Income
• Commission earned
• Interest received on investments
• Tips in the case of waiters or waitresses
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8. Expenses
• Expenses is the collective name for all the things
that you spend money on
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9. 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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10. Variable expenses
• Change from month to month
• You generally have more control over variable
expenses
• Examples:
– Electricity
– Haircuts
– Entertainment
– Food
Mathematical Literacy pg 51
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11. 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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12. 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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13. 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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14. 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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15. 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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16. 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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17. 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
Mathematical Literacy pg 58
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18. Income Statement for previous month (March)
Income
Salary of father R5 600,00
Salary of mother R 1950, 00
Interest earned R44, 66
R7, 595,00
Expenses R7 556,00
Fixed Expenses
Monthly rent R2 050,00
Insurance and funeral policies R 400,00
Transport by taxi R300,00
School fees for younger sister R265,00
Variable Expenses
Clothes R250,00
Medical R 146,00
Water and electricity R265,00
Telephone R480,00
Food and household goods R2 850,00
Savings R250,00
Entertainment R300,00
Net Income (Income less expenses) R39,00
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19. 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
Mathematical Literacy pg 58
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20. Read Financial Information
and Make Decisions
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21. Finance
• Income, expenses and financial planning
• Read financial information and make decisions
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22. Financial Documents
Financial Documents
Bank Deposit Pay Slip Quotes
Statement Slip
Utility Bill Receipt Accounts Cheque
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23. 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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24. 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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25. 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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26. 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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27. Wonder Bank Ltd
23 Factory Road
BIESIESFONTEIN 5066 Bank statement from:
17/05/07 to 31/06/07
Savings Account
Mr Sipho Mkize
Apartment 67
Biesieshof
Biesiesfontein 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 0,55 6 745,34
fee
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 ?
Mathematical Literacy 2
31/07/07 Head Office Monthly fee 2,00 ?
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28. 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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29. 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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30. Crossed Paid to
Amount written Signatur
out in full e
Mathematical Literacy 2
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31. Deposit Slip
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32. 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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33. Pay Slip
Sparkie Welders (Pty) Ltd
Employee name: Mr B. Mokoena
Walter Sisulu Drive ID no: 686070068092
Botshabelo Payment date: 25/04/08
3488
Part time hours Earnings Deductions
25,50 4011,15 Tax: 1002,79
UIF: 40,11
Nett Pay
2968,25
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34. Pay Slip
• Information that must appear:
– Employer and employee details
– Salary amount
– Taxable amount
– UIF contribution
– Company contributions
– Leave due
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35. Receipts
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36. Receipts
• A receipt is evidence of payment
• These should be kept for personal records and
for tax purposes
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37. Utility Accounts
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38. 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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39. 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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40. Retail Accounts
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41. 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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42. 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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43. 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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44. 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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45. 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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