Learning Objectives
- distinguish income from expenditure;
- classify fixed and variable expenses;
- prepare a simple budget;
- calculate a surplus or deficit;
- make sensible financial decisions from numerical information.
Introduction
This lesson develops Understanding Money from meaning and patterns before moving to calculations. Look for what the quantities, shapes or symbols represent, then connect that idea to the method.
Key Notes
Read the definitions and key facts below carefully. Each rule is most useful when you can explain why it fits the situation, not simply recall it.
🧮 Interactive Budget Builder
Change the income and expenses. Watch the balance move between a surplus and a deficit.
Monthly income
Total expenses
Money remaining
Income saved
Money scale
Income
Expenses
Remaining
$0$750$1,500$2,250$3,000
Relationship: balance = income − total expenses. The formula still matters; the visual helps you see what each part does.
🌍 Where Will You Use This?
Budgeting helps households, students, businesses and governments decide how to use limited money. The same mathematics appears in bank statements, payslips, invoices and personal financial planning.
🤔 Think About This...
You receive US$40. You need US$12 for transport, US$8 for lunch and want to save US$10.
How much money remains after meeting those plans?
US$40 − US$12 − US$8 − US$10 = US$10.
Money Has a Flow
Key idea: A budget is a plan showing expected income,
expected expenditure and the resulting balance.
Balance = Total income − Total expenditure
Types of Income
Earned income
Salary, wages, commission or payment for work.
Other income
Interest, rent received, gifts or business profit.
Fixed and Variable Expenses
Fixed expenses
Usually stay the same for a period, such as rent or a subscription.
Variable expenses
Change with use or choice, such as food, electricity or entertainment.
Worked Example: Preparing a Budget
Tariro receives US$180 in a month. Her expenses are transport US$45, food US$60, phone data US$18 and savings US$25.
1
Total planned outflow = 45 + 60 + 18 + 25 = US$148.
2
Balance = 180 − 148 = US$32.
3
She has a surplus of US$32.
Surplus and Deficit
Income > Expenditure → Surplus
Income < Expenditure → Deficit
💼 Money Smart Tip
Savings should be treated as a planned part of the budget, not only whatever happens to remain at the end.
Reading a Simple Statement
Opening balanceUS$85.00
Deposit+US$60.00
Transport payment−US$18.00
Groceries−US$42.50
Closing balanceUS$84.50
🔍 How Do I Recognise This in an Exam?
- “Prepare a budget” → organise income and expenses.
- “Find the balance” → income minus expenditure.
- “Surplus” → positive amount left.
- “Deficit” → spending exceeds income.
- Look carefully for deposits, withdrawals and transaction signs.
⚠️ Common Mistakes
Mistake 1: Adding expenditure to income instead of subtracting it.
Mistake 2: Forgetting small expenses when finding totals.
Mistake 3: Calling a positive balance a deficit.
Mistake 2: Forgetting small expenses when finding totals.
Mistake 3: Calling a positive balance a deficit.
✅ Quick Check
Income is US$250 and expenses are US$210. Find the balance.
Is rent usually fixed or variable?
What does a deficit mean?
🧠 Let’s Think Together
Before calculating, identify the information given, the result required and the mathematical relationship that connects them. Predict whether the answer should be larger, smaller or unchanged, then use that prediction to check the result.
Practice Questions
Foundation- Classify salary, groceries, rent and electricity as income or expenditure.
- Monthly income is US$320 and expenditure is US$278. Find the balance.
- A budget has income US$150 and expenses US$172. State the deficit.
- Nyasha receives US$260. She spends US$55 on transport, US$74 on food, US$22 on data and US$35 on household items. She saves US$40. Find her remaining balance.
- A bank account opens with US$125. It receives US$80, then payments of US$36.50 and US$42.75 are made. Find the closing balance.
- A family wants to save 15% of its US$800 income. Its fixed expenses are US$420 and variable expenses are US$205. Can it meet the savings goal? Find the final amount remaining.
✅ Check Your Work
Show practice answers
Foundation
- Salary: income. Groceries, rent and electricity: expenditure.
- US$42 surplus.
- US$22 deficit.
Developing
-
US$34.
Total = 55+74+22+35+40 = 226.
Balance = 260−226 = 34. -
US$125.75.
125+80−36.50−42.75 = 125.75.
Challenge
-
Yes. Savings target = 15% of 800 = US$120.
Total planned = 420+205+120 = US$745.
Remaining = US$55.
Exam Focus
Show the mathematical relationship you are using, keep notation consistent and give a clear final answer. Use a quick estimate, diagram or inverse operation to check that the result is reasonable.
Summary
- Income is money received; expenditure is money spent.
- A budget plans income, spending and saving.
- Balance = income − expenditure.
- A positive balance is a surplus; a negative one is a deficit.