1.8 Personal finance
Personal finance
Everything on personal finance that can come up in the WJEC GCSE Mathematics and Numeracy, in all three units. Each skill below has the method, the mistake that costs the most marks, a worked example, and free practice marked the way WJEC marks it.
Practise personal finance free
A worked example
Wages · [2 marks]
Dylan earns £12.90 an hour in a part-time job. How much does Dylan earn for 36 hours of work?
- M136 × £12.90
- A1£464.40
The exam skills (14)
Wages
- Pay = hours × hourly rate.
- Multiply.
- Write it in pounds and pence.
Watch out: Writing £86.4 instead of £86.40.
VAT
- VAT is 20%, so the multiplier is 1.2.
- Price including VAT = price × 1.2.
- Price before VAT = price with VAT ÷ 1.2.
Watch out: Taking 20% off the VAT price to remove VAT. Divide by 1.2 instead.
Best buy
- Work out the price of ONE item (or the amount per £1) for each deal.
- Compare like with like.
- Say which is better and show both values.
Watch out: Just naming the deal without the working. Comparisons need both values.
Percentage profit
- Profit = selling price − cost price.
- Percentage profit = profit ÷ cost price × 100.
- Always divide by the ORIGINAL (cost) price.
Watch out: Dividing by the selling price.
Bank statements
- Start with the opening balance.
- Add everything paid in and subtract everything paid out.
- Give the answer in pounds and pence.
Watch out: Adding the money out instead of subtracting it.
Overtime
- Basic pay = basic hours × rate.
- Overtime rate = rate × 1.5 (time and a half) or × 2 (double time).
- Total = basic pay + overtime hours × overtime rate.
Watch out: Paying all the hours at time and a half.
Income tax
- Taxable income = income − personal allowance.
- Tax = taxable income × the rate.
- Only the part above the allowance is taxed.
Watch out: Taxing the whole salary.
Household bills
- Standing charge = number of days × daily charge.
- Usage cost = units × price per unit.
- Add them, and convert pence to pounds (÷ 100).
Watch out: Leaving the answer in pence, or adding pence to pounds.
Compound interest
- Multiplier = 1 + rate, e.g. 2% → 1.02.
- Raise it to the number of years: 1.02ⁿ.
- Multiply by the amount invested.
Watch out: Using simple interest (adding the same amount each year).
Currency
- £ to another currency: multiply by the rate.
- Back to £: divide by the rate.
- Check: £1 = €1.12, so you get more euros than pounds.
Watch out: Dividing when changing pounds to euros.
Profit and loss
- Selling price = cost × the multiplier (e.g. 1.35).
- Sale price = selling price − the fraction of the selling price.
- Profit = sale price − cost.
Watch out: Taking the fraction off the cost instead of the selling price.
Take-home pay
- Taxable income = income − personal allowance; tax = that × 20%.
- National Insurance on the part above its threshold.
- Take-home pay = income − tax − NI.
Watch out: Forgetting the National Insurance.
Buying on credit
- Deposit = the percentage of the cash price.
- Total on credit = deposit + number of payments × payment.
- Extra = credit total − cash price; as a percentage, ÷ cash price × 100.
Watch out: Forgetting to add the deposit.
Comparing savings
- Simple interest: the same amount each year (rate × amount × years).
- Compound: amount × multiplierⁿ.
- Work out both totals and compare.
Watch out: Picking the higher rate without checking: compound can beat a higher simple rate.
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