Earning an Income

Question 1

What is a wage?

Answer 1

Money received by workers, usually on a weekly basis, for services they provide to an employer. During public holidays the worker might earn penalty rates (eg. time and half, double time)

Question 2

What is commission?

Answer 2

The percentage of a sales price received by a salesperson for their service.

Question 3

What is a dividend?

Answer 3

Sum payable as profit for shares.

Question 4

What are social welfare payments?

Answer 4

A payment made by the government to support people in need - these include unemployment benefits, sickness benefits and homeless allowance.

Question 5

What is a fee?

Answer 5

Money paid to others for their services (such as dentists, doctors and solicitors).

Question 6

What is a salary?

Answer 6

A fixed amount of money paid on a regular basis (usually fortnightly or monthly) to a permanent employee of an organisation.

Question 7

What is an income?

Answer 7

Money received on a regular basis from work, property, business, investment or welfare payments.

Question 8

What is overtime?

Answer 8

Time during which work is done outside of regular working hours. Such times is usually paid at higher rates.

Question 9

What is profit?

Answer 9

What remains after all business expenses are deducted from sale revenue.

Question 10

What is a royalty?

Answer 10

A sum paid to authors, musicians and so on as a percentage of the proceeds from their work.

Question 11

What is superannuation?

Answer 11

A way of saving so an employee has some money in retirement.

Question 12

What are fixed expenses?

Answer 12

Expenses that are the same amount every time. Necessary payments such as tax, bank fees, rent, mortgage payments, food, bills, electricity.

Question 13

What are variable expenses?

Answer 13

Expenses that change over time - desires and ‘wants’. (holidays, entertainment, toys, phone, shoes)

Question 14

Why save money?

Answer 14

• Houses are extremely expensive that most people can’t even afford to pay cash for them, instead needing to take a deposit out.
• Saving to buy a particular item
• Important to save for emergency items (illnesses, accidents)
• Retirement, by putting funds in superannuation
• Once leaving school, saving money for travel
• A sense of satisfaction and achievement

Question 15

What is impulse buying?

Answer 15

Buying something without giving much thought as to whether you really need it.

Question 16

What is a net income?

Answer 16

The amount a person has left after income tax is deducted

Question 17

What is a savings plan?

Answer 17

A commitment to regularly put aside some money for future use.

Question 18

What are some benefits of saving?

Answer 18

• Being able to buy expensive items in the future.
• Having funds in case of an emergency
• Feeling a sense of security
• Being able to invest to earn more money
• Having money to live after you retire

Question 19

How does income influence saving?

Answer 19

High income earners tend to save a greater percentage of their income than low income earners - as they have more money left after spending on fixed expenses.

Question 20

How does age influence saving?

Answer 20

Age influences a person’s level of income, in addition to who they are providing for and what their current fixed and variable expenses are. For example, young families need to spend money on nappies, school, carers, etc - whereas families with children who have moved out are at the peak of their income earning and also don’t need to worry about providing for their children.

Question 21

How does location influence saving?

Answer 21

People in more extreme climates need to spend money on heating or air conditioning. Living near public transport or entertainment centers will influence spending patterns. In addition, housing in cities is more expensive than country areas, but petrol may be higher in country areas.

Question 22

How does wealth, taste and attitude affect saving?

Answer 22

To accumulate wealth, you need to save money - once you are wealthy, saving money may be unnecessary. In addition, in some cultures, saving is considered very important. Some people are also impulsive shoppers while other people think saving is more important. In addition, people might be fixated on brand names or expensive entertainment.

Question 23

How did the GFC influence saving?

Answer 23

Before the global financial crisis the rate of saving by most Aus was steadily declining but after people had started saving more because they were worried about losing their jobs and they have tried to pay of their debts faster.