Activity: Calculating Net Income
Desired Outcome: I can source information on earnings and deductions and use it when making calculations to determine net income.
Level: Fourth Level (Scottish Curriculum)
Focus: Questions with Answers
Introduction: 1. Begin the activity by discussing the concept of earnings and deductions with the students. Explain that earnings refer to the money one receives for work or services, while deductions are the amounts subtracted from earnings for taxes, insurance, or other purposes. 2. Emphasize the importance of understanding net income, which is the amount of money left after deductions have been subtracted from earnings.
Activity: 3. Provide the students with a scenario where they have a part-time job and need to calculate their net income. For example: - Sarah works at a local store and earns £8 per hour. She works 15 hours a week. - Her deductions include 20% for taxes and £5 for insurance.
- Ask the students to calculate Sarah’s gross income (earnings before deductions) for a week.
- Answer: Gross income = £8/hour × 15 hours = £120
- Next, ask the students to calculate the amount deducted for taxes.
- Answer: Tax deduction = 20% of £120 = £24
- Then, ask the students to calculate the amount deducted for insurance.
- Answer: Insurance deduction = £5
- Now, instruct the students to calculate Sarah’s net income (earnings after deductions) for a week.
- Answer: Net income = Gross income - (Tax deduction + Insurance deduction) = £120 - (£24 + £5) = £91
- Discuss the importance of understanding net income and how it helps individuals plan their expenses and budget effectively.
Extension: 9. Provide additional scenarios for the students to practice calculating net income. Include different earnings, deductions, and working hours to challenge their understanding. - Example: John earns £10 per hour, works 20 hours a week, and has deductions of 15% for taxes and £8 for insurance. Calculate his net income for a week.
Conclusion: 10. Summarize the activity by highlighting the importance of being able to source information on earnings and deductions and using it to calculate net income accurately. Encourage students to apply this knowledge in real-life situations to make informed financial decisions.