What skills will you need to have when managing money? Identify these skills and in pairs discuss why each is needed.
Benefits of managing your money • You will know where your money is going and whether you are spending more than you can afford.
• It will give you peace of mind and a sense of control.
• It can help you to avoid debt problems, prepare for emergencies, save money and achieve your future goals.
Wages refers to weekly payment for doing a job. Salary refers to fortnightly or monthly payments for doing a job. Debt is money that you owe and have to pay back.
A plan for spending money and saving money is called a budget. Creating a budget involves dividing up income and allowing a certain amount towards each expense and saving, to avoid going into debt.
Income
Most households have a regular weekly, fortnightly or monthly income, in the form of a wage or salary, a pension, social welfare payments or interest on savings.
Discovery Learning Find out what type of payment a person can get if they are unemployed, disabled or sick.
However, not all the money we earn is ours to spend. Some goes to the state to pay for running the country. This is our tax liability and is a compulsory deduction from our wages or salary.
Gross income is the total amount earned before deductions are made. Net income is a person’s take-home pay – the amount left after deductions have been taken out. Statutory deductions are compulsory (must pay) and voluntary deductions are optional. Tax credits refer to the part of an income that is not taxed.
Deductions
Statutory deductions • Income tax – Pay As You Earn (PAYE) is deducted by the employer and goes to the state to pay for services.
• Pay Related Social Insurance (PRSI) goes towards paying people if they are ill or unemployed.
• The Universal Social Charge (USC) is a government tax on income.
• Pension contributions can be compulsory in some jobs.
