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At home, at work and at school, working within a budget is of vital importance.
Budgeting is listing estimated income and expenditures for a given time period or event.
Once this list is done, you are able to make informed choices regarding income and expenditure as time or the event passes, based upon this budget.
Monthly budgetingIncome- how much money is received normally from employment. Other sources of income can include interest from savings accounts, tax credits and benefits.
For budgeting purposes it is necessary to start calculations after all tax and insurance amounts have been deducted from salaries. This is known as net income (incomings).
...Monthly budgeting continuedExpenditure- the amount spent on items which are deducted from income. Expenditure amounts will vary depending upon the situations being considered (outgoings).
Case study: Part 1Jim is employed as an apprentice chef. He is in his third year of his apprenticeship. His salary is Equation: pounds850. He owns a car and stays with his parents in the family home. He travels 50 miles a day to his work (there and back). His monthly budget is shown thus:
Calculate Jim's total expenditure and compare it to his income.
Case study: Part 2Jim is expecting his monthly salary to increase to £930 as he enters the final year of his apprenticeship. He is also planning to leave home and flat share.
His new home will be within walking distance of his place of employment. His contribution to the monthly rent will be £350. This is inclusive of gas and electricity bills as well as council tax.
Jim has to review his budget plan.
Car expenditure: Jim realises that even without considering his increase in income that he can afford the £350 monthly rent if he did not own a car.
Case study: Part 3