Application
This unit has wide application and may be used in workplaces, schools, adult and community learning organisations or registered training organisations in order to build the financial literacy of learners. The unit may also be used as part of pre-vocational or new apprenticeship programs or as part of services provided by counselling or advisory organisations. |
Elements and Performance Criteria
ELEMENT | PERFORMANCE CRITERIA |
1. Analyse and discuss budgeting as a financial tool | 1.1. The role of budgeting in the lives of different groups and the importance of budgeting appropriately to meet expenses is analysed and discussed and related to different stages of life 1.2. The importance of setting financial goals is analysed and discussed 1.3. Obstacles that might prevent financial goals being achieved are analysed and discussed with the types of behaviours and skills required for successful budgeting explored and analysed |
2. Develop a personal budget | 2.1. All income and expenses for a six month period are recorded to assist in estimating expenditure requirements 2.2. A spreadsheet for recording all budget information is obtained or developed and established to record income and expenditure for a relevant period of time 2.3. All sources of income and regular fixed expenses and variable expenses for the specified period are identified and listed in a personal budget using the budget spreadsheet |
3. Develop a personal budget | 3.1. Total expenses recorded are subtracted from the total income to determine a surplus or deficit budget for the specified period 3.2. Reasons for a deficit budget are explored if relevant and ways to reduce expenses or increase income are investigated 3.3. Allocation of surplus funds towards saving and meeting identified financial goals is explored |
4. Implement and monitor the personal budget | 4.1. The budget is followed according to plan for a period of time 4.2. Actual expenses and income for the period during which the budget is implemented are recorded and compared to budgeted expenses and income with any differences in budgeted and actual amounts looked at and the budget modified where necessary 4.3. Handy hints for managing the personal budget are discussed 4.4. Ongoing review of the budget is conducted to ensure it remains relevant and to ensure updates are incorporated if necessary |
Required Skills
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Required skills |
communication skills to: clearly explain budgeting principles use questioning to develop clear understanding liaise with others, share information, listen and understand use language and concepts appropriate to cultural differences numeracy and IT skills to: calculate interest and loan repayments and surplus or deficit funds use a calculator useinternet information literacy skills for interpreting relevant information learning skills to maintain knowledge of budgeting and saving techniques |
Required knowledge |
principles of budgeting role of credit and savings in establishing personal wealth understanding of the financial institutions and their savings products |
Evidence Required
The Evidence Guide provides advice on assessment and must be read in conjunction with the performance criteria, required skills and knowledge, range statement and the Assessment Guidelines for the Training Package. | |
Overview of assessment | |
Critical aspects for assessment and evidence required to demonstrate competency in this unit | Evidence of the ability to: explain the benefits and purposes of budgeting prepare a budget spreadsheet explain the difference between fixed and variable expenses prepare and implement a personal budget. |
Context of and specific resources for assessment | Assessment must ensure: competency is demonstrated in the context of the the range statement access to and the use of a range of common office equipment, technology, software and consumables access to information about the budgeting process, personal financial records, software and other relevant resources. |
Method of assessment | A range of assessment methods should be used to assess practical skills and knowledge. The following examples, in combination, are appropriate for this unit: evaluating an integrated activity which combines the elements of competency for the unit or a cluster of related units of competency verbal or written questioning on underpinning knowledge and skills setting and reviewing simulations or scenarios group discussion to determine and confirm understanding. |
Guidance information for assessment |
Range Statement
The range statement relates to the unit of competency as a whole. It allows for different work environments and situations that may affect performance. Bold italicised wording, if used in the performance criteria, is detailed below. Essential operating conditions that 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) may also be included. | |
The different groups who may budget may include: | families governments individuals: single married elderly students tourists, travellers. |
Different stages of life may include: | approaching and during retirement buying your first home moving out of home starting a family studying. |
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 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 (e.g. on a weekly or monthly basis) showing all projections versus actual income and expenses for the period and monitoring variances. |
A spreadsheet may: | be simple or complex depending upon the extent of the individual's finances have one section for recording all money received as income and another section for expenses both variable and fixed have 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: | interest on investments, dividends proceeds from sale of assets social security benefits, pensions, allowances, child assistance wages, commission, bonuses, tips. |
Fixed expenses may include: | fees: school and university fees bank fees insurance loan repayments (if loan is based upon fixed interest rates) such as: personal loans car loans credit card debts Higher Education Contribution Scheme (HECS) public transport rates rent subscriptions to: magazines newspapers clubs travel including public transport, petrol |
Variable expenses may include: | car maintenance living expenses such as: food clothing medical loan repayments if loan is based upon variable interest rates miscellaneous expenses such as: gifts recreation entertainment fines mobile telephone mortgage repayments utilities such as: water gas electricity telephone. |
Ways to reduce expenses may include: | comparing prices for essential items monitoring use of utilities such as electricity, gas and water moving back home reducing expenditure on discretionary items such as expensive clothing, magazines, eating out share accommodation using cheaper modes of transport. |
Ways to increase income may include: | combining part-time work with studying investigating eligibility for student allowances or other relevant government benefits taking on a part-time job or holiday work. |
Handy hints may include discussing: | how to avoid getting into financial difficulties how to minimise fees and charges imposed by financial institutions how to use credit card debt effectively the problems of impulsive buying, particularly when under peer pressure ways to cut back on spending or change negative spending habits. |
Sectors
Unit sector | Financial literacy |
Employability Skills
This unit contains employability skills. |
Licensing Information
Not applicable.