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Unit 1

Earning an income; Spending and saving income; Factors that influence the need for saving

This chapter focuses on how not to bankrupt yourself.

Table of Contents

“Summer is here! It is time to throw on the sunglasses, wax the surfboard, jump in the car and head for the beach. No cares, no responsibilities, just fun in the sun. For teenagers, summer can be exciting, with opportunities to enjoy the company of friends doing a whole range of activities.

Along with the many exciting challenges of being a teenager, though, come new responsibilities. To get to the beach or pool, teenagers need to manage their money wisely. Pocket money or wages earned through casual work may help to provide the sunglasses and the boardshorts; however, the purchase of a car will probably be the result of a longer term savings plan. To put petrol in the car and pay for repairs also requires careful financial management.

It’s possible — and the earlier we start to organise our personal finances, the better!”

the 2008 financial crisis called, they want their money back


Types of income

Type of income Definition
Wage Money received by workers (usually on a weekly basis) for services provided to their employer.
Commission Percentage of sales price received by a salesperson according to volume of sales they generate.
Dividend Share of profit received from a publicly listed company - sum payable as profit for shares
Social welfare Payment made by a government to help people in need
Rent Payment made by a tenant to an owner for use of property
Royalties Sum paid to artists as a percentage of proceeds from their work
Profit Remaining sum after all business expenses are deducted from sales revenue. If negative, this is a loss.
Fee Money paid for a service.
Salary Fixed amount of money paid on a regular basis to an employee (usually paid fortnightly or monthly)
Superannuation A retirement fund mandated by law in Australia - saving for retirement
Other terms Definition
Overtime Time when work is done outside regular working hours, usually at higher rates (e.g 150% of normal pay is time-and-a-half, 200% is double-time)
Penalty rates Increased rate of pay for working on public holidays or weekends
Retainer Extra sum of money on top of a commission
Odd jobs Completion of duties such as small tasks which are paid for


The economic problem: infinite needs and wants but finite means.

Therefore, most of our expenses go towards taxes and bills. They remain the same amount every time and are known as fixed expenses. Sometimes, we might go and buy a Chatime for ourselves. This is an example of a variable expense; expenses that change over time.


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Reasons for saving money is different for everybody:

  • Save for a larger purchase (e.g a house) – this might need to be supported by a loan
  • Extra backup money in case of emergencies that can affect someone and their dependants – to save for a rainy day
  • Older working people put aside money for retirement in a superannuation for security and maintain their quality of living
  • Satisfaction and pleasure like how Mr Mean counts his coins

Saving can be easy by formulating a savings plan. Savings plan is a commitment to a medium/long-term plan that can either be flexible or strict. It can be impacted by impulse buying, the unplanned purchase of goods and services.

Here is a stupid cringy image on savings plans:

Savings plan

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