Budgeting and Financial Planning
Budgeting involves planning income and expenses to ensure financial goals are met. Mathematics is used to calculate net income, track spending, and identify savings opportunities.
What You Need to Know
Key Concept Diagram
Net income = gross income - tax - other deductions
A budget balances income against fixed expenses (rent, bills) and variable expenses (food, entertainment)
Surplus occurs when income exceeds expenses; deficit occurs when expenses exceed income
Percentage of income calculations help evaluate spending in each category
Key Vocabulary
Budget
A plan that matches expected income against planned expenses over a time period
Net income
Take-home pay after tax and other deductions have been removed from gross income
Fixed expense
A regular cost that stays the same each period, such as rent or a loan repayment
Variable expense
A cost that changes from period to period, such as groceries or entertainment
Knowledge Check
Select the correct answer for each question. Click "Check Answer" to see if you are right.
Question 1
A person earns $800 per week gross. After $180 tax and $40 superannuation, what is the net weekly income?
Question 2
Monthly income is $3 200. Expenses total $2 750. What is the outcome?
Question 3
A budget shows 30% of net income on rent. If net income is $2 400, how much is spent on rent?
Key Concepts Summary
- ●Net income = gross income - tax - other deductions
- ●A budget balances income against fixed expenses (rent, bills) and variable expenses (food, entertainment)
- ●Surplus occurs when income exceeds expenses; deficit occurs when expenses exceed income
- ●Percentage of income calculations help evaluate spending in each category