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Income Management

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Title: Income Management


1
Income Management
  • Chapter 12

2
Before We Begin
  1. Where do you get your money?
  2. What do you spend it on?
  3. Where do your parents get their money?
  4. What do they spend it on?
  5. Where do your grandparents get their money?
  6. What do they spend it on?

3
Chapter 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.

4
Chapter 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.

5
Chapter 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.

6
Chapter 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

7
Chapter 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

8
Chapter 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.

9
Chapter 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.

10
Chapter 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.
  • salary
  • wages
  • commission
  • piecework
  • profit sharing
  • medical insurance
  • paid sick days
  • paid holidays
  • drug and dental plans

11
Chapter 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.

12
Chapter 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

13
Chapter 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.

14
Chapter 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.

15
Chapter 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.

16
Chapter 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

17
Chapter 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.
18
Chapter 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.

19
Chapter 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.
20
Your Turn
  • http//www.slice.ca/Watch/Default.aspx?categoryID
    1248692156 Watch Till Debt Do Us Part
  • Read the chapter bubbles for an Apprentice
    Challenge
  • Introductory Profile p.363-364 Qs 1-2 to submit
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