Title: Income Management
1Income Management
2Before We Begin
- Where do you get your money?
- What do you spend it on?
- Where do your parents get their money?
- What do they spend it on?
- Where do your grandparents get their money?
- What do they spend it on?
3Chapter 12 Income Management What Is Money?
- Money allows businesses to operate and consumers
to buy products and services that meet their
needs and wants. - Forms of Legal Tender
- Coins and paper money are classified as legal
tender by the government of Canada and must be
accepted as payment for goods and services. Coins
are minted and - bank notes are issued as paper money.
- Canadian Bank Notes
- Since 2001, the Bank of Canada has been updating
bank notes with sophisticated security features.
Canadas culture, the queen and prime ministers
are depicted on bank notes.
4Chapter 12 Income Management What Is Money?
- Special Features of Bank Notes
- Ever changing state-of-the-art security features
on Canadian bank notes discourage high-tech
counterfeiting (the production of fake money). - However, features such as unique textures on
every note help visually impaired people to make
distinctions between denominations. - Credit cards, traveler's cheques, passports, and
other identification are subject to
counterfeiting as well.
5Chapter 12 Income Mgmt What Is Money?
- Bank of Canada Information p.366 textbook and
BofC booklet card - Note the various security features that are found
on this 20 bill. - 1. Holographic stripe When you tilt the note,
brightly coloured number 20s and maple leaves
move within the shiny stripe on the side of the
bill. - 2. Watermark portrait Hold the bill to the
light. On the front and back, - ghost-like images of the portrait appear.
- 3. See-through numbers Irregular marks form a
number 5 when the bill is held to the light. - 4. Security thread When you hold the note to the
light, a solid - line appears.
6Chapter 12 Income Mgmt What Is Money?
- New Bank of Canada Polymer Bank Notes
- Videos
- Security Features
- Design and Development
- How its Made
- Distribution
- Security Feature Video
7Chapter 12 Income Mgmt What Is Money?
- New Bank of Canada Polymer Bank Notes
- 100 bill issued on November 14, 2011.
- 50 bill issued on March 26, 2012
- 20 bill issued on Nov 7, 2012
- 5 and 10 will be issued in November 2013
-
8Chapter 12 Income Management What Is Money?
- Moneys true value is its purchasing power. The
paper used to - print our currency is virtually worthless.
- Money is worth something only because we accept
that it has a specific valuetwo nickels equal
10, four quarters equal 1, etc. - Moneys purchasing power changes as prices for
goods and services change. - In general, prices tend to rise (inflation), so
the dollar buys less from one year to the next.
Today, 10 buys much less than it did 30 years
ago.
9Chapter 12 Income Management What Is Money?
- You have probably noticed that the prices of
clothing, magazines, and movie tickets have
increased over the past few years. - Purchasing power is measured by the Consumer
Price Index (CPI), which is calculated monthly by
Statistics Canada. - It measures 600 products typically bought by
Canadian households. - This basket of goods includes food, shelter,
transportation, clothing, recreation.
10Chapter 12 Income Management What Is Income?
- Income is money that an individual or business
receives from sources, such as wages or sales,
interest, and dividends. Closely related to
income is the need for a financial plan that
looks at how to make money grow. - Types of Personal Income
- 1. Forms of Employment Income
- 2. Employees Benefits
- 3. Other sources of income
- can include dividends, allowance, interest,
gifts, - part-time jobs, and inheritance.
-
- medical insurance
- paid sick days
- paid holidays
- drug and dental plans
11Chapter 12 Income Management What Is Income?
- 4. Gross Income
- Gross income is the total amount of money
- received by a person before any deductions.
- 5. Disposable Income
- Disposable income, or take-home-pay, is the
amount of income that is left after deductions of
income tax, Canada Pension Plan (CPP), and
Employment Insurance (EI). - 6. Discretionary Income
- Discretionary income is the amount of money that
is left over after all necessities have been
paid. Necessities consist of rent or mortgage,
food, transportation, insurance, electricity, and
so on.
12Chapter 12 Income Management Managing Money
for Personal Use
- Money management is the daily financial
activities aimed at satisfying a persons needs
and wants within a limited income. Individuals
need to carefully plan, save, and spend their
money to get the most out of it. - Why We Buy? (p.371-373)
- Income and Price
- Status
- Current Trends
- Customs and Habits
- Promotions
13Chapter 12 Income Management Spending Money
- Todays society is known as a consumer-driven
one. This means that the economy offers
consumers a never ending supply of exciting and
innovative goods and services. -
- Comparison Shopping
- Comparing price, quality, features, and services
helps consumers make smart purchases. - Comparing Price and Quality
- Comparison shopping means selecting the least
expensive product or service that best meets the
consumers needs and wants. - Features
- The features of goods and services are often the
most important requirements for consumers when
they purchase these items.
14Chapter 12 Income Management Spending Money
- Services
- Retail stores often offer services that
complement their merchandise. Some of these are
free delivery for large purchases or warranties
on these items. Warranties are usually written
promises that products comply to high standards. - Planning and Comparing
- Prices and features of products or services can
be compared using catalogues, newspapers, calling
stores, or Internet searches.
15Chapter 12 Income Management Budgeting
- A budget is a plan for smart spending and savings
based on ones income and expenses. - Personal Budgeting
- Personal budgets can be kept daily, weekly, and
even monthly. - Many people avoid budgeting because they believe
that it is too difficult, or it will limit their
enjoyment of life. - However, learning to budget can actually help
them find money for the things they really want
or need.
16Chapter 12 Income Management Budgeting
- Personal Budgeting continued
- Setting Personal Goals
- Setting up a personal financial plan requires
establishing realistic and achievable short- and
long-term goals. - Most people need to set aside specific minimum
monthly amounts to achieve long-term financial
goals. - For example Saving for post-secondary, a car, a
vacation, a down-payment for a house
17Chapter 12 Income Management Budgeting
- Preparing a Personal Budget
Step 1 Calculate the amount of expected income.
Step 2 Calculate expenses.
- Include regularly occurring fixed expenses.
- Estimate variable expenses that change monthly.
Step 3 Calculate amount left over.
18Chapter 12 Income Management Managing Money
for Business Use
- Money management for businesses means that they
are accountable to the owners and/or
shareholders. The primary goal is profit. - Types of Business Income
- Three forms of business income are revenue, gross
income, and net income. - Budgeting for a Business
- Business success is determined by its ability to
stay within a budget. - The two types of business budgets are start-up
budgets and operating budgets. - Setting Business Goals
- Managers set company goals that are measurable
and specific. Budgets often involve a variety of
different departments, such as production,
marketing, human resources, and finance.
19Chapter 12 Income Management Managing Money
for Business Use
- Preparing a Business Budget
Step 1 Calculate amount of business income
expected.
Step 2 Calculate expenses, including fixed and
variable.
Step 3 Calculate amount left.
Step 4 Review budget.
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