Chapter 5 – Personal Finance
11-12 Days
5.1
Earning a Living
 Review prior skills on page 222
 Review converting % to percent
1) 30% 2) 15%
3) 8.5%
a)
b)
c)
d)
e)
f)
g)
4) 5¾%
Terms and Definitions
Gross Earnings – total pay before deductions
Net Earnings – pay after deductions a.k.a. “Take Home Pay”
Salary – a method of earnings which is preset for a given pay period. A salary
is fixed regardless of how much you work in that pay period.
Wage – method of earnings based on the number of hours worked in a given
pay period. i.e. hourly wage.
Commission – method of earnings based on a percent of the total sales volume
of a salesperson.
i. Graduated Commission – rate of commission changes as certain
sales goals are met. i.e. 5% on first $1000 sold, 7% on next $1000
Piecework – earnings based on number of items produced i.e. $20 for every
bicycle assembled.
Pay Periods –
Weekly
52 pays per year
Bi-weekly
26 pays per year
Semi-monthly 24 pays per year
Monthly
12 pays per year
Example 1
Your rent was $475/month but there is now an increase of 6.5% What is
your new rent?
$475 * 1.065 = $505.88
Example 2
At a sale, a hat is reduced from $21 to $16.50. What is the percent
decrease?
21 – 16.50 = $4.50
$4.50 / $21 * 100 = 21%
Example 3
You earn $14.80 per hour for a 40 hour week and time and a half for
overtime. If you work 56 hours in one week, how much did you earn?
$14.80(40) + $14.80(1.5)(16) = $947.20
Example 4
Your salary is $1400 per month plus 2¾% of total sales. If total sales for
one month were $51893, what was your salary for that month?
$1400 + (0.0275)($51893) = $2827.06
Example 5
Gratuities (Tips)
Hourly wage is $5.50 and tips are approximately $38.00 per day. You
keep 65% of the tips earned. In one week, you work 5 days at 6 hours a
day. What is your wage at the end of the week?
(6)(5)($5.50) + ($38)(5)(0.65) = $288.50
Example 6
Mike has a choice of two restaurants in which to work. At Plato’s, he
would earn $8/hour + tips averaging $25 per day. At Donalda’s, he would
earn $7.25/hour + tips averaging $40 daily. However, at Donalda’s, 25%
of tips are given to kitchen staff. If he works 35 a week spread over 5
days, which job will make Mike more money?
Plato’s
Donalda’s
Assign
35(8) + 25(5) = $405
35(7.25) + 40(.75)(5) = $403.75
Page 226 #4,5,6,8,9
Page 282 #2,5
Or
5.1 Earning a Living Exercises (Handout  )
 Better by $1.25
5.2
Payroll Deductions
Definitions
A) Net pay (or take home pay) is gross pay minus all deductions.
B) Deductions
1) CPP – Canada Pension Plan
- 3% of gross earnings to a max of $1186.50 annually
- your employer contributes an equal amount
- its purpose is to fund the government sponsored pension
plan.
2) EI – Employment Insurance (formally unemployment insurance)
- 3% of gross earnings to a max of $994.50 per year
- employer contributes 1.4 times more
- insures worker against unemployment situations like
disability, maternity leave, layoff etc.
3) Income Tax
- approximate levels of taxation
$0 for total annual taxable income < $7000
18% for total annual taxable income between $7000 - $30000
29% for total annual taxable income between $30000-$60000
39% for total annual taxable income exceeding $60000
Not all income is taxable. Taxable Income is gross income minus any of the following
tax-exempt deductions like union dues, retirement plan contributions (RPP,RRSP) etc.
Payroll deduction charts found in text page 286-289.
Go through examples in text on pages 228-232 first.
Example 1
Sarah owns a dry cleaning store in Regina. She pays her manager Gary
every two weeks. He has gross earnings of $1175. His TDI claim code is
2 and he pays $150 every two weeks into an RPP. What are his
deductions and earnings?
CPP = $36.41
EI = $29.96
Income Tax (1175-150=1025) = $194.15
Total Deductions = $36.41 + $29.96 + $194.15 + $150 = $410.52
Net Earnings = Gross Earnings – Deductions = $1175 - $410.52 = $764.48
Example 2
Suppose Gary wanted to estimate his net earnings as he does not have
access to tax tables.
EI and CPP are both 3% of earnings = $1175 (3%) = $35.25
Income tax – need to know what percent to pay so calculate Gary’s yearly
income. ($1175-$150)*(26) = $26650 Therefore, 18% tax bracket.
18% of $1025 = $184.50 (Income Tax)
Net Earnings = Gross Earnings – Deductions
= 1175 – 35.25 – 35.25 – 184.50 – 150
= $770 (very similar to actual in example 1)
Example 3
Donna lives and works in Calgary. Her annual salary is $35000. Her
basic personal tax credit is $6456. Each week she has the following taxexempt deductions taken from her gross income.
$5.50 for professional dues
$60 to an RRSP
$8 for medical insurance
a) Calculate Donna’s approximate annual deductions for CPP and EI.
b) What is the total income Donna will have deducted in a year?
c) Estimate Donna’s net income.
a)
CPP
EI
(0.03)(35000) = $1050
(0.03)35000) = $1050 thus $994.50
b)
c)
Assign text page 234 #8-12 and Handout 
5.3
Expenses
Review ratios and proportions.
a)
5=x
9 27
b)
(15)
d)
A)
24 = 12
15 x
c)
(7.5)
450 ml = $1.89
120 ml
$x
($0.50)
Halibut sells for $3.29 per 100g.
i)
How much to buy 575g?
ii)
How many grams can you buy for $25?
($18.92)
(760g)
Foreign Exchange
- do as a ratio question and cross multiply to solve.
Example 1
i)
ii)
Assume 1 Swiss Franc = $1.26 Canadian.
How much Canadian is 3.5 Swiss Fancs worth?
How much is $200 Canadian worth in Swiss Francs?
i)
1
= 3.5
1.26
x
x = 3.78 Canadian
ii)
1
= x
1.26
200
x = $158.73 Swiss Francs
Example 2
Kim is planning a trip to England. Air travel is $1800 and her parents
suggest she have 2000 British Pounds for spending money and
accommodations. Current exchange rate is 1 Pound = $2.30 Cdn.
i)
ii)
What is the cost of the trip?
How much should Kim save each month for a year to save for the trip?
i)
1
= 2000
2.30
x
x = $4600
Cost of trip equals spending money plus airfare = $4600 + $1800 = $6400
ii)
Example 3
$6400 / 12 = $533.33 per month
Dan told you that $1 Cdn = $0.63 US while Sally told you that $1 US =
$1.59 Cdn. Can this be true? Prove.
1
= x
0.63
1
x = $1.59
or
1 = x
1.59
1
x = $0.63
Example 4
If 1 Swiss Franc = $1.26 Cdn and 1 German Marc = $0.97 Cdn, how many
German Marks does one get for 100 Swiss Francs?
Cdn is the common currency.
1 Swiss = 100 Swiss x = $126 Cdn
1.26 Cdn
x
1 Grm
=
0.97 Cdn
B)
x Grm
126 Cdn
x = $129.90
Unit Pricing
= total price / # of units
Example 1
Which provides a better value, $0.69 for 284ml or $1.79 for 907 ml?
0.69 / 284 = $0.00243
1.79 / 907 = $0.00197 
C)
Property Tax = assessed value * mill rate
1000
Example 1
The Humbug property has a market value of $105000. The assessed value
is 60% of market value. The tax rate is 32.3 mills of assessed value.
What is the monthly tax payment?
Assessed Value = 60% of $105000 = $63000
Property Tax = Assessed Value * Mill Rate = 63000 * 32.3 = $2034.90
1000
1000
Monthly Payment = $2034.90 / 12 = $169.58
Assign pages 239-241 #1(b&d), 2, 3b, 5(a-c), 6, 7, 8(difficult)