making money exam

Define: income

money recieved on a regular basis for work or through investments

• either earned or unearemed, occuring over a given period of time

Define: earned income

Income obtained through employment or performing work, typically as compensation for time, effort, or services provided.

Define: unearned income

Income received from sources other than employment or direct work, such as dividends or rent.

Define: Wages

Income earnt from a job, where you are paid an hourly rate to complete set tasks

• more hours worked = more money earnt

Define: Rental Income

Income recieved by landlords for the lease on a property by a tenant

Define: Dividends

A distribution of a company’s earnings (profits) to eligible shareholders

Define: Salary

An annual amount of money earnt from a job, either paid weekly, fornightly, or monthly, the amount is usually regular and you WONT earn more for extra hours worked.

Define: Transfer income

A payment of money usually from the government for which there are no goods or services exchanged.

• includes money from government in the forms of benefits such as unemployment, disability suport and aged pensions

Define: Interest

the charge for the use of borrowed money, includes income earned from investments in bank deposits

Define: Profit

money that is earned in trade or business, it’s caluclated as the left over revenue fafter paying costs of producing and selling goods/services

Define: Disposable Income

income from all sources, including the reciept of welfare/transfer payments less taxation

Define: Commission

a percentage of a sale that an employee recieves based on the cost of the item, some earn this income in addition to their base income while others makea portion of the sale in income (eg, real estate agents)

Define: Superannuation

A long-term savings plan designed to help you save money for your retirement which your employer contributes to, along with your own personal contributions.

features:

• compulsory contributions from your employer, so you’re saving w/out thnking abt it (+)

• tax benefits: lower tax rate than regular iincome (+)

• can’t access till reached preservation age (55-60) & retired (-)

• fees + charges can eat all returns (-)

• super balance can fluxuate depending on market condigtoons (-)

Define: Personal Income Tax 

A tax imposed on an individual’s taxable income, calculated using Australia’s progressive taxation system, individuals with higher incomes pay a higher rate of tax than those with lower incomes, with the amount of tax payable increasing as income rises.

Define: Medicare Levy

An amount you pay in addition to the tax you pay on your taxable income, it helps fund some of the costs of Australia's public health system known as Medicare

• The Medicare levy is 2% of your taxable income.

Define: Tax free threshold

the income level below which no tax is paid ($0-$18,200/year)

Purpose of a personal budget

To effectively manage an individual’s income and expenses by tracking spending, allocating money towards essential needs, and setting financial goals. A personal budget helps prevent overspending, encourages saving, and supports financial stability.

Strategies to save money & manage financial goals

• tracking your spendings

• save regularly (build an emergancy fund)

• differentiate wants vs needs

• set financial goals & work towards achieving it

Difference between simple & compoud interest

Simple interest: way of caluclating the extra money over a specific period, based on the original amount
Compound interest: unlike simple interest, the interest for the next period is calculated on the initial investment + interest earned

Define: interest

The cost of borrowing money or the reward for saving or investing it, expressed as an additional amount paid or earned on the original sum (known as the principal).

Difference between earning & paying interest

Earning Interest: Receiving additional money as a reward for depositing savings or investing funds.

Paying Interest: Paying an additional amount of money as the cost of borrowing funds, such as through loans or credit cards.

Define: debt

the state of owning money

Define: good debt

a loan that helps you generate income and increase your networth (eg. mortages or student loans)

Define: bad dept

a loan used to purchase depreciating(devalued) or high-interest assets (eg. credit card debt)

Advantages vs disadvantages of investing in property

advantages

• Investors can rent out their property to earn a source of passive income

• Property may increase in value over time (allowing investors to make a profit when selling)

• Long-Term Investment: Property can provide financial security and help build wealth over time.

disadvantages:

• Purchasing property requires a significant financial investment, including a deposit and mortage

• Ongoing Expenses: Maintenance, repairs, insurance and council rates can be costly.

• Property values can decrease due to changes in the economy or housing market.

Define: insurance

Covers the cost of repairing or replacing your house and your belongings when something goes wrong. It provides financial security by reducing the financial burden of unexpected events, protecting individuals from significant expenses and helping manage financial risks.

Impact of changes in interest rates on mortgage owners and house prices

Interest Rates Increase:

• Mortgage repayments increase → less disposable income.

• Housing prices & demand decrease.

Interest Rates Decrease:

• Mortgage repayments decrease → more disposable income.

• Housing prices & demand increase.

Define: shares

Units of ownership in a company that allow investors to earn money through dividends (a share of profits) or capital growth (selling shares at a higher price). However, shares can lose value, resulting in financial loss.

Advantages and disadvantages of investing in shares

advantages

• Shares can increase in value over time.

• Investors may receive a portion of company profits.

• Shares can generally be bought and sold quickly.

• Shares can be purchased with relatively small amounts of money.

disadvantages:

• Share prices can fluctuate or decrease, causing financial loss.

• Profits and dividends are not guaranteed

  • company can choose to reinvest that year (not give money)

• Investors could lose their entire investment if the company collapses.

• Economic changes can cause sudden price fluctuations.

List common oniline & phone scams & their definitons

• Identity Theft: Stealing or using someone’s personal information without permission to commit fraud or other crimes.

• Skimming: Illegally copying credit or debit card information to make unauthorised transactions.

• Phishing: Using fake emails, messages or websites to trick individuals into revealing personal or financial information.

• Fake Charities: Scammers pretending to represent charities to steal donations or personal information.

• Dating & Romance Scams: Creating fake online relationships to gain someone’s trust and steal money or personal information.

• Travel Scams: Advertising fake holidays, accommodation or travel deals to steal money.

• Prize & Lottery Scams: Falsely claiming someone has won a prize or lottery to obtain money or personal information.

List strategies to protect personal & financial information from scammers

Pros and cons of starting a small business

Non-price factors that impact demand and supply and the impact these will have on price

Define: opportunity cost

The value or benifit of the next best alternative (what was given up)

Define: economic resources & examples of each

Resources are productive inputs that are required by businesses to make goods and services

• Natural (Land): any resources that occur naturally

  • water, mineral resources

• Labour: the ‘work’ input: physical or mental conrtribution by people

  • carpentry, teaching

• Capital: any ‘man-made’ item used in a business/production process

  • dishwasher, coffee machine, sink

Define: public relations & explain it’s importance

• maintaining goodwill & mutual understanding

• communicating a positive relationship

• grow your customer base & achieve business objectives

  • eg. increase sales & profit

• developing good relos w/ various groups (customers, suppliers, etc)

benifits:

• better brand recognition

• improved public recognition in the marketplace

• greater creditability

• higher level of sales, market shares and profitability

• improved marketability of the business’ products

Examples of PR strategies

• treating all customers with equal respect

• providing clearn, accurate product information (ingredients, materials, country of origin)

• clear disclosure of fees, surcharges or conditions on sales

How to calculate profit & loss

revenue - expenses = profit or loss

Role of ethical practicies in business

Role of human recources management

the strategic and operational approach to effectively managing people in an organisation - gaining a competitive advantage

• recruitment & selection

• training & development

• performance management

• compensation & benifits

• workplace health & safety

• employee relations

• compliance