PERSONAL FINANCE
TOPICS
• Income
• Spending and Saving
• Factors that influence saving
• Borrowing Money
• Managing Your Money
• Insurance
• Consequences of poor financial
management
• Sources for Financial Advice
• Laws and Regulations
• Investing Money
THINK/PUZZLE/EXPLORE

• Choose ONE of the topics in this chapter and write down a response for:
• THINK – what is something you know? (I think that….)
• PUZZLE – what is something that puzzles you? (I don’t understand
how….)
• EXPLORE – what is something you’d like to know more about? (I’d
like to know more about…)
INCOME

• What is income?
• Income is money received, especially on a regular basis, from work,
investments, business ventures or social welfare programs.

• What are different types of income?

TYPES OF INCOME

• Wages/Salary • Compensation
• Commission • Gifts
• Dividend • Inheritance
• Social Welfare Payments • Interest
• Superannuation • Pension
• Fee • Rent
• Profit • Royalties
 CONNECT THE TERMS
A landlord Wage
A 16 year old student Pocket money

A salesman getting 10% of sales made Royalties

Someone depositing money into a bank account Gifts

An elderly person who has retired from paid
Compensation
work
Children doing work around the home Youth Allowance

A business Inheritance

An employee Rent

A shareholder Commission

An author of a book about pets Interest

Someone receiving money through a relative’s
Pension
will
Someone whose relative helps out financially to
Dividends
start a business
A person recovering from a work accident Profit
A landlord Rent
A 16 year old student Youth Allowance

A salesman getting 10% of sales made Commission

Someone depositing money into a bank account Interest

An elderly person who has retired from paid
Pension
work
Children doing work around the home Pocket Money

A business Profit

An employee Wage

A shareholder Dividends

An author of a book about pets Royalties

Someone receiving money through a relative’s
Inheritence
will
Someone whose relative helps out financially to
Gifts
start a business
A person recovering from a work accident Compensation
EXPENDITURE

People who earn money may wish they could spend it on whatever they choose, but the reality is quite
different. Taxes and charges, bank fees, rent, mortgage payments and bills quickly take a large

proportion of the money that we earn. These expenses are fixed expenses; that is, they are the
same amount every time.
For example, on your mobile phone plan you may have to pay a minimum charge of $40 per month.

Other types of expenses are variable and change over time. For example, you may buy a DVD
this month and go to the movies next month.
TYPES OF EXPENSES

Fixed Expenses Variable Expenses

EXPENSES

• Taxation – the Federal Government deducts a proportion of income earned by employees. People
who pay tax in this way are known as PAYG (Pay As You Go) taxpayers.
• Goods and Services Tax (GST) – the Federal Government imposes a 10% GST on most
goods/services, excluding fresh food, health insurance, and medical fees.
• Rent/board – money paid on a property leased from another person or money paid to parents.
• Loan repayments to a financial organisation – borrowing money, i.e. a car loan, or a mortgage,
which is a loan for the purchase of a home. Interest rates fluctuate (move up and down). If you can’t
meet the repayments when/if the interest rate increases, the lender can sell the property to settle the
debt.
EXPENSES

• Institutional fees – charged by banks for keeping accounts, writing cheques, and other
financial services.
• Utilities – bills, i.e. water, telephone, gas, electricity, water.
• Educational expenses – photocopying, Internet, fees, books.
• Superannuation – a fixed amount deducted from your income providing for your
retirement from age 55–60 or older.
SCENARIO
Julia Moretti is an arts student working
part-time at the local bakery earning
≈$400 per week. She lives in a share
house with two friends, and owns a
mobile phone and a 10-year-old car, i.e.
a ‘bomb.’
$100 for rent share; $90 for food and
bills; $65 for PAYG taxation; $40 for
car, i.e. fuel, etc.; $50 for entertainment,
i.e. restaurants, movies; $35 for mobile
phone.
• Working in groups, at your tables,
examine (inquire into) the
scenario.
• Approximately how much is Julia
saving each week?
• What items in Julia’s expenses are
essential to her survival?
• What items could be considered to
be luxuries?
• Identify TWO ways in which Julia
could save more money each
week?
QUESTIONS

1. What factors affect our spending patterns?

2. Why would the relationship between fixed expenditure and variable expenditure change as
we get older?
SAVING

• To save means to put some money aside and spend it later rather than spend it now.
• People save for many reasons – the most common is that they cannot afford to buy a good
or service now because they do not have enough money. Eg. Buying a Car
SAVING

• A number of other factors contribute to our decision to spend or save, including:

• Our age;
• Our disposable income (that is, how much income we earn after tax);
• How much wealth we have already accumulated;
• Whether we are an impulse buyer or a ‘scrooge’;
• How risk averse we are (that is, how willing we are to take a chance that we may lose the
money).
QUESTIONS

• What is a ‘savings plan’? Why is it important?

• Explain how impulse buying can quickly damage a
person’s savings plan.
• Complete the mind map on reasons for saving 