Budgeting

Learning Objectives:

- To test various mathematical skills, including written calculations and percentages in a real life context.- To learn how to use mathematical skills to plan and budget appropriately.

The Task:

The aim of this task is to calculate your monthly take home pay and then use this information to inform your choices about lifestyle. You will have a certain number of bills that fall under the compulsory category, these are commitments that must be paid. The remaining items fall under the optional category and can be chosen if you have enough income remaining to cover the cost.

The task is split into three parts:

PART A: Choose a career option and calculate your average monthly income.PART B: Choose a place to live and then calculate all of your compulsory expenditure.PART C: Choose any remaining optional items depending upon how much money you have left to spend.

BUDGET PLAN: After completing the activity you will need to fill in the budget plan with the detail of all your choices.

BUDGET PLAN:

You will need to keep a monthly budget plan that keeps track of all your income and outgoings. You are not allowed to go over budget at any point. If this occurs you will need to make changes to your choices to reduce your outgoings.

FURTHER DISCUSSION:

At the end of the budget plan there are some boxes provided for your comments and for further thoughts and discussion. You may like to consider how you could increase your earning potential, or of ways you could ease the burden of compulsory expenditures. Think about what you learnt from the lesson and whether or not anything surprised you.

PART A – CAREER OPTIONS & INCOME

Jobs requiring 5 good GCSE’s

FOOD PRODUCTION OPERATIVE:

PAY: £6.50/hr plus possible overtime.

HOURS: 40 hour week, working either:

6am – 2.15pm or 2.15pm – 11pm on a rotational basis.

Option for max 10 hours overtime a month paid at £7.00/hr

REQUIREMENTS: Good communication skills. The ability to work as part of a team.

CARE ASSISTANT:

PAY: £7.50/hr

HOURS: Part time: 20 hours a week

REQUIREMENTS: All positions are subject to an enhanced CRB check. Car is essential for work in some village and rural areas.

TRAINEE LABORATORY TECHNICIAN:

PAY: £7.50/hr plus possible overtime.

HOURS: 37.5 hour week:

9am to 5pm with 30 min lunch

Option for max 10 hours overtime a month paid at £7.50/hr

REQUIREMENTS: Must have a grade A-C in Chemistry. A strong scientific interest. The ability to work as part of a team.

RETAIL ASSISTANT:

PAY: £6.50/hr

HOURS: Part time: 30 hours a week

REQUIREMENTS: We are looking for people who enjoy building relationships with customers and colleagues a like.Full training on tills and sales will be given.

Jobs requiring a degree

If you choose one of these jobs you will need to take into account the costs of repaying student loans.

PIZZA DELIVERY DRIVER:

PAY: £6.70/hr plus tips and mileage

HOURS: Evenings and weekends 10 hours.

REQUIREMENTS: Car is essential.

SUPERMARKET CHECKOUT OPERATOR:

PAY: £6.50/hr

HOURS: Flexible shifts up to 15 hours a week.

REQUIREMENTS: Full training will be provided.

SECONDARY SCHOOL TEACHER:

PAY: Starting Salary £22,000 pa

REQUIREMENTS:

- Degree in a relevant subject.- Postgraduate teaching qualification. - GCSE grade A-C in English and Maths- Familiarity with the curriculum in your subject.- Excellent communication skills.

IT SUPPORT TECHNICIAN:

PAY: Starting Salary £22,000 pa

REQUIREMENTS: - Company car provided.- Appropriate Degree- Sound technical Knowledge of Windows - Windows Server 2008 experience- Networking Experience TCP/IP topologies, switches, routers- Strong Analytical skills- SQL Knowledge

CALCULATING YOUR MONTHLY INCOME

GENERAL NURSE:

PAY: Starting Salary £21,400 pa

REQUIREMENTS:

- Nursing Degree Essential- Candidates will need to show evidence of the following:- The ability to communicate with and gain the trust of people from a wide range of backgrounds.- Organisational and managerial skills, particularly as your career progresses.- Empathy.

CHARTERED ACCOUNTANT:

PAY: Starting Salary £25,000 pa

REQUIREMENTS:

- Degree Essential- Accountancy Qualification- Good English and Maths preferably A grade at GCSE.- Good business knowledge and IT skills.- Tact, discretion, integrity and trust.- Excellent numeracy skills.

INCOME TAX:

Whatever your job you will have to pay income tax. This will be deducted from your pay by your employer. Income Tax is payable at the following rates:

20% of everything you earn over £10,600 a year.40% of everything you earn over £32,000 a year.

NATIONAL INSURANCE:

Whatever your job you will need to pay national insurance contributions, as with income tax these are deducted automatically from your pay by your employer. It is payable at the following rates:

12% on all earnings over £8,000.

PENSION CONTRIBUTIONS:

Whatever your job it is strongly advised that you contribute toward a personal pension plan. Unless you specifically choose to opt out then this will be deducted by your employer.

7% of monthly income

TASK - COMPLETE YOUR MONTHLY PAYSLIP

PAY SLIPEmployee Name:   Rate:      Hours:  Earnings DeductionsGross Monthly Income   Income Tax  Overtime   National Insurance      Pension Contributions             Student Loan         Total Earnings Total DeductionNET Monthly Income    

OTHER CONSIDERATIONS:

If you have chosen one of the jobs that require a degree and are earning more than £21,000 a year then you will have to pay back your student loan. This will be automatically deducted by your employer as follows:

Earning over £21,000 - £27 a month

Earning over £24,000 - £49 a month

Space for calculations:

PART B – A PLACE TO LIVE & COMPULSORY EXPENDITURE

Choose a place to live.

1 BEDROOM FLAT:

MONTHLY RENT: £650 pcm

DESCRIPTION: One bedroom ground floor maisonette is located in a quiet cul-de-sac within walking distance of the mainline railway station.

COUNCIL TAX: BAND A

1 BEDROOM HOUSE SHARE:

MONTHLY RENT: £400 pcm

DESCRIPTION:

ALL BILLS INCLUSIVE with this SINGLE ROOM with BUILT IN WARDROBES. 15min walk from the mainline railway station.

COUNCIL TAX: INCLUDED

2 BEDROOM HOUSE:

MONTHLY RENT: £800 pcm

DESCRIPTION:

Two Bedroom House - Driveway Parking - Entrance Hallway Leads To: - Fitted Kitchen - Spacious Lounge with French Doors to Rear Garden - Double Bedroom - Large Single Bedroom - Fitted Bathroom with Shower 

COUNCIL TAX: BAND B

3 BEDROOM HOUSE:

MONTHLY RENT: £950 pcm

DESCRIPTION:

3 BEDROOM SEMI-DETACHED HOME. Good sized property, open plan Lounge & Dining area with Gas Fireplace & Patio Doors to Garden, Modern Kitchen with W/M, D/W & integrated F/F, 2 Double Bedrooms & 1 Single, Bathroom with WC & Shower over Bath.

COUNCIL TAX: BAND C

COMPULSORY EXPENDITURE:

These are expenses and commitments that you must pay each month before you even consider any extras. For this activity they include:

- RENT- COUNCIL TAX- UTILITIES (Gas, Electric, Water)- FOOD- TRAVEL TO WORK

The boxes below will give detailed information on each of these and the rates you need to pay depending on your previous choices.

COUNCIL TAX:

Council tax is payable at the following rates:

BAND A: £1008 per year, payable monthly at £84 a month

BAND B: £1176 per year, payable monthly at £98 a month

BAND C: £1344 per year, payable monthly at £112 a month

UTILITIES:

GAS & ELECTRIC

After visiting a price comparison website you have discovered that your cheapest option is a dual fuel account at the following rates:

1 BED HOUSE - £55 per month2 BED HOUSE - £75 per month3 BED HOUSE - £90 per month

WATER RATES

Covering both water and sewerage costs at the following rates:

1 PERSON IN PROPERTY - £15 per month2 PEOPLE IN PROPERTY - £22 per month

TRAVEL TO WORK:

FOOD:

The cost of food will depend on where you shop and whether or not you are cooking your own food or eating out/purchasing takeaway. You must pick one of the following options:

CAR

For jobs that require a car please refer to optional expenditures on

owning a vehicle

PUBLIC TRANSPORT

£50 a month

In order keep your job you need to be able to travel to and from work and this has a cost involved. Assume that the following travel costs apply.

OPTION A

Shop at local discount supermarket, preparing

own meals.

£18 per week

OPTION B

Shop at supermarket buying branded goods.

£25 per week

OPTION C

Eating out at restaurants or ordering takeaway.

£50 per week

PART C _- OPTIONAL EXTRAS

CAR:

Some of the jobs require you to have a car, or you may just want to have one for your own convenience. The buying options are as follows:

INSURANCE:

Based on an average rate of insurance for drivers who are 18 years old for the above vehicles, your insurance premium will be as follows.

FUEL COSTS:

Assuming approx. 10-15 mile journey to work and back and

light use on a weekend, at current prices approximately

£20 per week.

OPTION A

After buying a new car, your parents have offered to give

you their 12 year old Ford Fiesta. It has done 82,000

miles.

COST: No upfront cost

Tax Band: BAND G (£180pa)

OPTION B

5 year old Vauxhall Corsa. Good condition, has done

50,000 miles.

COST: £3995 or £75 a month for five years.

Tax Band: BAND F (£145pa)

OPTION C

Brand new Peugeot 108. Manual, Petrol. Tax Band A

so no road tax to pay.

COST: £8500 or £165 a month for five years.

Tax Band: BAND A (free)

INSURANCE: £1150 per annum, payable monthly at a cost of £110 per month.

OTHER LIFESTYLE OPTIONS

TELEVISION:

If you wish to have any of the following options you will be required to purchase a TV license:

MONTHLY INSTALLMENTS: £12 per month

FREEVIEW

No monthly cost

NOW TV

£7.95 pm for Entertainment £9.99 pm for Movies.

Requires Internet connection.

SKY TV

Basic Package £25 per monthBasic with movies £35 per monthBasic + movies & sports £45 per

month

Basic Package - £5.99 pmRequires Internet Connection

Combined Package Deal

Includes Broadband/TV and PhoneWith Basic TV - £35 per month

With TV Extra (includes movies) - £45 per month

PHONE & INTERNET:

All phone and internet packaged require a landline to the house. The current standard rate for a landline is as follows:

PHONE & INTERNET PACKAGES:

Landline Rental (Required for all phone and internet connections): £15 per month

BT INFINTY BROADBAND

BT's totally unlimited broadband. Free weekend calls. Up to 36Mb speed

COST: £7.50 per month

FUEL Broadband & Calls

Unlimited download limit. Free evening & weekend

calls to UK landlines.

COST: £4.00 per month

VIRIGN Broadband & Phone

Super-fast 100Mb fibre optic broadband, unlimited downloads &

unlimited weekend calls

COST: £11.00 per month

MOBILE PHONE:

If you want to have a mobile phone, then your options are as follows:

iPhone 6

VODAFONE

1GB Data Allowance1000 minutes

Unlimited TextsCOST: £35 per month

Samsung Galaxy S5

O2

1GB Data AllowanceUnlimited CallsUnlimited Texts

COST: £25 per month

Nokia Lumia 735

TESCO Mobile

500GB Data Allowance500 minutes1000 Texts

COST: £15 per month

DISPOSABLE INCOME:

Your disposable income is the money you have left each month after meeting all of your other commitments. Once you have calculated your disposable income, you will need to decide what to do with it. You could spend it on clothes, going out, or other items you might want to buy.

It is advisable that you save some of your disposable income, you may for instance want to start saving for a mortgage deposit, or just to have an emergency fund in case unforeseen expenses come along.

Consider what you want to do with this disposable income,e.g how much you want to save, how much you want tospend, and describe this in the relevant box on the budget planner.

MONTHLY BUDGET PLANNER

Income ExpenditureCategory Amount Category Amount

Plans for disposable income:

Total Income:Total Expenditure:Money Remaining:

Discussion & Review

Think about the activity and write some comments about what you have learnt. Did anything surprise you? Has the task helped you to understand more about personal finances? What areas of mathematics has it helped you to improve?

You may have noticed that it is a struggle to meet all of your commitments in some circumstances. Can you think of any ways you might be able to improve your circumstances, or to make it easier to afford larger properties etc?

Rate your level of confidence with the maths you have covered today: