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Elements and Performance Criteria

Required Skills

REQUIRED KNOWLEDGEampSKILLS

Knowledge requirements include

principles of budgeting

role of credit and savings in establishing personal wealth

understanding of the financial institutions and their savings products

Skills requirements include

communication skills including active listening and the ability to seek expert advice as required

numerical and mathematical skills as relevant to calculations of interest and loan repayments and surplus or deficit funds

Evidence Required

Assessment of performance requirements in the unit may be undertaken in a range of contexts including schools adult and community education centres counselling services citizens advice bureau etc Aspects of competency including attainment of relevant knowledge and skills may be assessed in a formal learning environment within the workplace or as part of another service provided to the candidate The Evidence Guide identifies the critical aspects knowledge and skills to be demonstrated to confirm competency for the unit Competency is demonstrated by performance of all stated criteria including the Range Statement applicable to the learning environment

Overview of assessment requirements

To achieve competency in this unit a person must be able to demonstrate

ability to explain the benefits and purposes of budgeting

ability to prepare a budget spreadsheet

ability to explain the difference between fixed and variable expenses

ability to prepare a personal budget

ability to implement the personal budget

Critical aspects of evidence

Evidence required for demonstration of consistent performance

Competence in this unit must be assessed over a period of time in order to ensure consistency of performance over the Range Statement and contexts which are applicable to the individual learner and the learning environment

Deliveryassessment relationship to other units

This unit may be assessed on its own or it may be assessed with other units that cover related skills and knowledge

Evidence is most relevant when provided through an integrated activity which combines the elements of competency for the unit or a cluster of units of competency

Assessment requirements

Method of assessment

For valid and reliable assessment of this unit evidence should be gathered through a range of methods to indicate consistent performance

Assessment of this unit of competence will usually include observation of processes and procedures oral andor written questioning on underpinning knowledge and skills and other methods as required

Context of assessment

This unit may be assessed in a formal learning environment in the workplace or within the environment of a related service provider such as counselling or advisory services

Resources required for assessment

Assessment of this unit of competency requires access to information about the budgeting process personal financial records software and other resources relevant to the unit of competency

Range Statement


The Range Statement relates to the unit of competency as a whole. It allows for different work environments and situations that will affect performance. The following variables may be present with training and assessment depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts. If bold italicised text is shown in Performance Criteria, details of the text are provided in the Range Statement.
The different groups who may budget may include:	individuals: single married elderly students tourists, travellers families businesses Governments
Different stages of life may include:	moving out of home studying starting a family buying your first home approaching and during retirement
Financial goals may include:	accumulating a set amount of money by a specified date in the future for the purposes of: purchasing assets financing holidays, educational expenses, home renovations and other known future expenses establishing a deposit for an investment such as a home or investment property aiming to repay existing debts and be debt free establishing a regular savings plan handling income and expenditure responsibly and avoiding financial difficulties
Obstacles that might prevent financial goals being achieved may include:	being unemployed, particularly long term unemployed insufficient income to afford items that are beyond the individual's means unexpected circumstances such as losing a job, falling ill and not being able to work
Behaviours and skills required for successful budgeting may include:	controlled spending disciplined approach to money organisational skills record keeping skills
Budget refers to:	a calculation of all projected income and expenditure for period of time (eg over a weekly or monthly basis) the budget shows all projections versus actual income and expenses for the period and should be monitored
The spreadsheet may be:	simple or complex depending upon the extent of the individual's finances at the very least it should have one section for recording all money received as income and another section for expenses both variable and fixed there should then be a section to record the difference between income and expenses for the period, this being the surplus or deficit financial situation for the period
Sources of income may include:	wages, commission, bonuses, tips interest on investments, dividends social security benefits, pensions, allowances, child assistance proceeds from sale of assets
Fixed expenses may include:	public transport rent rates insurance loan repayments if loan is based upon fixed interest rates (eg personal loans, car loans, credit card debts, Higher Education Contribution Scheme) fees (school and university fees, bank fees) travel including public transport, petrol subscriptions (eg to magazines, newspapers, clubs)
Variable expenses may include:	living expenses such as food, clothing, medical utilities such as water, gas, electricity, telephone mobile telephone mortgage repayments loan repayments if loan is based upon variable interest rates car maintenance miscellaneous expenses (eg gifts, tobacco, recreation, entertainment, fines)
Ways to reduce expenses may include:	share accommodation moving back home reducing expenditure on discretionary items such as expensive clothing, magazines, eating out
Ways to increase income may include:	taking on a part-time job or holiday work combining part-time work with studying investigating eligibility for student allowances or other relevant Government benefits
Handy hints may include discussing:	the problems of impulsive buying particularly when under peer pressure ways to cut back on spending or change negative spending habits how to minimise fees and charges imposed by financial institutions how to use credit card debt effectively how to avoid getting into unnecessary financial difficulties