workskills unit 3 managing your own money assignment brief

WORK SKILLS ASSIGNMENT BRIEF

WorkSkills Workbook

Unit 3 Managing Your Own Money

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WORKSKILLS ASSIGNMENT BRIEF

Unit 3: Managing Your Own Money (L2)Credit Value: 2

Assessor: Verifier:Date of issue: Date for Completion:

Learning OutcomesThe learner will:

Assessment CriteriaThe learner can:

1. Be able to produce a personal budget

1.1 Carry out calculations of expenditure and income for an individual month1.2 Calculate balance at the end of the month1.3 Identify ways to ensure expenditure does not exceed income

2. Understand the use of credit to borrow money

2.1 Identify different sources of credit2.2 Explain how to use credit responsibly for expenditure and investing2.3 Describe the potential problems of using credit

Assessment Criteria Evidence to be gathered

1.1 Carry out calculations of expenditure and income for an individual month

1. Completed “Sources of Income” table and explanations2. Completed “Outgoings” table3. Three ways to plan how to divide up your money to cover

essentials4. Example of unnecessary spending5. Completed “Monthly Budget” spreadsheet

1.2 Calculate balance at the end of the month

6. Accurate calculation of balance at the end of the month

1.3 Identify ways to ensure expenditure does not exceed income

7. Reworked spreadsheet showing changes made to original spreadsheet when budgeting for a holiday

8. Analysis of budget “Decision time!”2.1 Identify different sources of credit

9. Completed “Sources of Credit” table10. Definitions of APR11. Advice on use of credit in 3 scenarios

2.2 Explain how to use credit responsibly for expenditure and investing

12. Completed table “Responsibilities and Consequences”13. Two things a lender would want to know from a borrower14. Completed document giving best advice to friend wanting to

buy a motorbike2.3 Describe the potential problems of using credit

15. “Warning!” document describing what could go wrong after you have taken out credit

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Scenario

When you start work or you are in work you will receive and income (wages) from your employer and you will need to be able to decide how to make best use of this. In order to manage your money well, you will need to budget how much you need to pay for your commitments e.g. mobile phone calls and balance this with how much you receive. You should you also think very carefully about using credit or applying for a loan to buy something you cannot afford at the moment

1. Sources of Income (AC 1.1)

We all want to have enough money so that we can spend it on the things we need. Ideally, we should balance the money coming in with the money we spend so that we have more money coming in than going out.

Money coming in is called INCOME. Complete this table to show you know where money may come from.

Source of income DescriptionWages/Salaries

Gifts

Inheritance

Pocket money

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Benefits

Loans

Credit

Interest on savings

Selling things

Explain one advantage of having a wage coming in rather than having a loan:

Explain one disadvantage of relying on selling things for your income:

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2. Outgoings (AC 1.1)

People also have many things to pay for. These are called OUTGOINGS, or their expenses – EXPENDITURE.

Complete the table below to show what you know about these. There is a space to add another expense you might know of.

Outgoing Description

Mortgage/Rent

Income tax

Gas/Electricity

Council tax

Telephone(mobile/landline)Water rates

Pension contribution

Groceries

Clothing

Transport

Credit cards

Entertainment

Which of the above do you think are NOT essential?

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Complete the table below to show how these outgoings apply to you at the moment. Add a comment for each item, for example “Telephone – non-essential but really useful. I rely on it but might use it too much”, “I will need to pay for this when I leave home.”

Outgoing DailyMonthly orWeekly?

Essential or

Non-essential?

Comment

Mortgage/Rent D/M/W E/N-E

Income tax D/M/W E/N-E

Gas/Electricity D/M/W E/N-E

Council tax D/M/W E/N-E

Telephone D/M/W E/N-E

Water rates D/M/W E/N-E

Pension contribution D/M/W E/N-E

Groceries D/M/W E/N-E

Clothing D/M/W E/N-E

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Transport D/M/W E/N-E

Credit cards D/M/W E/N-E

Entertainment D/M/W E/N-E

M/W E/N-E

3. Three ways to plan how to divide up your money to cover essentials (AC 1.1)

Write down THREE ways you could plan to divide up your money so you always have enough to pay essential expenses; that is, those that have to be paid.

1. ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

2. ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

3. ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

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4. Example of unnecessary spending (AC 1.1)

Getting the balance right between income and expenditure is called BUDGETING.

It’s a plan for saving and spending. It involves you deciding what you have to spend your money on, what you want to spend your money on and what you’re prepared to give up to be able to afford these things. For example, you might:

NEED to spend money on new clothes WANT to buy a new mobile phone

Can you think of something you spend money on but don’t really need?

............................................................................................................................................

............................................................................................................................................

............................................................................................................................................

............................................................................................................................................

5. “Monthly Budget” spreadsheet (AC 1.1)6. Calculation of balance at end of month (AC 1.2)

When you are at work, you will receive an income (wages) from your employer and you will need to be able to decide how to make best use of this money.

You need to look at:

How much you have – your INCOME How much you must pay out- your EXPENSES

To make sure your income is more than your expenses, you need a plan for how much you need to put away for each expense or bill.

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Doing this is called creating a BUDGET. You need to see how far your money (income) will go. Some people put a little money away as soon as they get paid so they know it’s “gone” and they can’t spend it on anything else.

Use the following information to complete the spreadsheet that follows:

Wages (after tax and National Insurance deducted) £210 a week

Rent £90 a week

Food and toiletries £80 a month

Mobile phone £15 a month

Insurance £20 a month

Entertainment £15 a week

Clothing £30 a month

transport £20 a week


My Budget


7. Spreadsheet showing changes made to original spreadsheet when budgeting for a holiday (AC 1.3)

My holiday

Destination: the destination I have chosen is:

………………………………………………………………………

Because

……………………………………………………………………..

Transport – and how much it costs:

………………………………………………………………………

Accommodation – and how much it costs:

………………………………………………………………………

Trips – and how much they cost:

……………………………………………………………………..

Spending money needed:

………………………………………………………………………

………………………………………………………………………

Other costs:

…………………………………………………………………………

………………………………………………………………………..

Total cost of holiday…………………………………………..

The date I have chosen for the holiday is: …………………………………………………..

This means that I have………………………….months to save for this holiday.

So, to be able to afford my holiday, I will need to save…………………. a month.

Attach some details of your holiday: for example a brochure or a screen dump

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Look at your spreadsheet to see whether you can afford to save the amount you need, in your preferred timescale, within your original budget.

Can you afford it?

You need to make sure that your expenditure (the money going out each month) is not greater than your income (the money coming in). Think about how you would like to adjust your budget to save up for the holiday. Use the space below to explain at least three ideas for how you could keep your budget in balance as you save for the holiday. How could you cut down on your expenses? Perhaps you could look at making lunch rather than buying expensive sandwiched, for example. Are there ways of making your holiday more affordable or giving yourself more time to save?

Idea 1

Idea 2

Idea 3


My Budget


8. Decision time! (AC 1.3)

How realistic were the initial ideas? Did you get it right or did you need to alter things?

Can you go when you want to? Will you have to save up for longer or change the choice of holiday?

Perhaps you still need a different plan. If so, then put the details of how you can make your budget work in the box below.

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9. Sources of credit (AC 2.1)

Not many people have enough money to buy everything they want straight away. Many people use credit at some time.

Write your definition of credit below.

..............................................................................................................................................

Now you are going to research sources of credit and give an example of each. You need to identify two different examples of sources of credit yourself to complete the last two rows. Collect flyers or advertisements for each one you research (you’ll need them later).

Type of credit Example Description Feature e.g. APR

Credit card Visa credit card Easy way to buy goods without a deposit. You can take goods away straight away.

16.9% APR

Overdraft

In-store finance

Hire purchase

10. What does APR stand for? (AC 2.1)

.................................................................................................................................................

.

What does APR mean?

.................................................................................................................................................

.................................................................................................................................................

.................................................................................................................................................

...

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11. Giving advice about credit (AC 2.1)

It is time for you to give some advice on the best way to buy things on credit. There are three scenarios. You need to make a decision for each, then explain and justify them.

Scenario 1

A couple want to buy a sofa for £1,500 but cannot afford to pay in cash. They are offered these 3-year credit deals:

In-store finance with an APR of 29.9% A deal with £600 deposit and the rest at 0% APR A bank loan at 12.3% APR

Your advice on the best deals Why?

State one method of credit that would not be suitable.

.................................................................................................................................................

.

Why is it unsuitable?

.................................................................................................................................................

.................................................................................................................................................

.................................................................................................................................................

...

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Scenario 2

A driving school runs a fleet of 15 cars. The cars do a high mileage and are driven by many people. The company has a policy of changing the cars every two years.

Your advice on the best way to finance the deals for the cars.

Why?

State one method of credit that would not be suitable to finance this purchase.

.................................................................................................................................................

.

Why is it unsuitable?

.................................................................................................................................................

.................................................................................................................................................

.

Scenario 3

A woman collects rare antiques. Sometimes she cannot afford to pay for them in full at the time that they are available. Explain two suitable methods of credit she could consider.

Method of credit Why?

1.

2.

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Why is hire purchase not suitable for this purchase?

.................................................................................................................................................

.................................................................................................................................................

.................................................................................................................................................

..

Now match these sources of credit with the correct definitions.

Loan Can pay for goods week by week or month by month till they are paid for, then you collect the goods.

Credit card Use the finance offered by the same company and you can build up loyalty points.

Store card Can buy and have anything today and pay for it later.

In-store finance You pay a deposit and then pay the rest off over a set number of months.

Overdraft Have the use of money if you need it but only pay interest on what you use.

Hire purchase Borrow a sum of money over a fixed period of time at a fixed rate of interest.

12. Responsibilities and consequences (AC 2.2)

Now that you have identified the ways to borrow money and to get credit, is there anything else to think about?

As part of task 9 you collected information/fliers about various sources of credit. These will contain information about the borrower’s responsibilities in using credit. Using the information you have collected, explain why it is important for the borrower to understand their responsibilities in using credit for expenditure or investment – the things they need to

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do and the consequences of not doing them. Try to give as much detail as possible in the table below.

Element or term Explain what the borrower should do (their responsibilities)

Explain the consequences of not doing these things

Application form Fill it in accurately, stating financial details correctly and honestly when asking for credit. They have a responsibility not to lie about their finances.

Application may be turned down or you could be charged with fraud.

Level of borrowing

Repayments

APR

Minimum repayments

Signing the credit agreement

Unclear details

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Difficulty with repayments

13. Two things a lender would want to know from a borrower (AC 2.2)What if you were the lender rather than the borrower? State two things you would want to know from the borrower before you lent them any money.

1. ...............................................................................................................................................

2. .................................................................................................................................................

14. Best advice (AC 2.2)

Your friend has heard that you worked out how to afford your holiday so thinks you ‘know about money’. He has come to you for advice about buying a motorbike.

He wants the motorbike now but hasn’t got enough money to buy it outright. He knows he can get it on credit but is unsure about the responsibilities that go with it.

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In the boxes below identify four things your friend needs to take into account before buying the motorbike on credit and why he should do this.

The second thing you must think about is…

Because…

…and make sure you…

The first thing you must think about is…

Because…


The fourth thing you must think about is…

Because…


The third thing you must think about is…

Because…


THE PITFALLS

OF BUING ON CREDIT

INTEREST RATE

CHANGES

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15. Warning! (AC 2.3)

Things can sometimes go unintentionally wrong after you take out credit.

In the boxes below write your ideas of things that could go wrong after someone has taken out credit to buy something. One idea is added for you.

The fourth thing you must think about is…

Because…


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Now complete the table below as a quick reminder to anyone thinking of taking out credit. For each problem you must give a detailed description.

WARNING!

Problem Description

How much are you actually paying?

Penalty fees for early repayment

What if the debt gets too high?

Legal action

Credit rating is affected

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Stress

Repossession

Learner declaration

I certify that the work submitted for this assignment is my own and research sources are fully acknowledged.

Learner signature: Date:

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Grading criteria Achieved? Y/N

Feedback

1.1 Carry out calculations of expenditure and income for an individual month1.2 Calculate balance at the end of the month1.3 Identify ways to ensure expenditure does not exceed income

2.1 Identify different sources of credit2.2 Explain how to use credit responsibly for expenditure and investing2.3 Describe the potential problems of using credit

Signed Date

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IV’d by Date

workskills unit 3 managing your own money assignment brief

Documents

use of credit

money unit

sources of income table

sources of income ac

credit scenariowhen

sources of credit table10

income wages

money l2credit value