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The pay slip and a monthly budget

Finance and economics, grade 10 (3 units) Lesson 12 of 15Learning

The pay slip and a monthly budget

Gross, deductions and net

At the end of every month a worker gets a pay slip: a sheet that lists how much they earned, and how much was taken off it.

  • Gross pay – all the pay the worker earned in the month: the hours, the overtime and any extras.
  • Deductions – sums the employer takes off the gross and passes on: income tax, National Insurance, health tax, and the pension – the worker’s savings for retirement.
  • Net pay – what is left, and what reaches the bank account.

When G\displaystyle G is the gross pay and D\displaystyle D all the deductions:

N=G−D\displaystyle N=G-D

The deductions depend on the pay and on the worker, so every question gives the percentages of its own pay slip.

Example: a pay slip

Shira worked 120 hours in a month, at 45 ₪ an hour.
Her pay slip took off 6% for the pension, and 3.5% for National Insurance and health tax together.
This pay slip has no income tax.

In the example below we work out the gross, each deduction out of the gross, and then the net:

Line on the slipCalculation₪
Gross pay120⋅45\displaystyle 120\cdot455400
Pension, 6%0.06⋅5400\displaystyle 0.06\cdot5400324
National Insurance and health tax, 3.5%0.035⋅5400\displaystyle 0.035\cdot5400189
All the deductions324+189\displaystyle 324+189513
Net pay5400−513\displaystyle 5400-5134887
  • Each deduction is worked out of the gross, not out of what is left after another deduction.
  • Of the 5400 ₪ she earned, 4887 ₪ reached her account.
Exercise 1

Omer worked 80 hours in a month, at 40 ₪ an hour.
His pay slip took off 6% for the pension, and 3.5% for National Insurance and health tax.
This pay slip has no income tax.

a

What is Omer’s gross pay?

    / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – check and a new line · * – times · ^ – power, ↓ – end of the power

    / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – a new line · * – times · ^ – power, ↓ – end of the power

    b

    What are all the deductions?

      / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – check and a new line · * – times · ^ – power, ↓ – end of the power

      / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – a new line · * – times · ^ – power, ↓ – end of the power

      c

      What is his net pay?

        / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – check and a new line · * – times · ^ – power, ↓ – end of the power

        / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – a new line · * – times · ^ – power, ↓ – end of the power

        Exercise 2

        On Dana’s pay slip the gross pay is 9000 ₪, and all the deductions are 1620 ₪.

        a

        What is Dana’s net pay?

          / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – check and a new line · * – times · ^ – power, ↓ – end of the power

          / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – a new line · * – times · ^ – power, ↓ – end of the power

          b

          What percent of the gross are the deductions?

            / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – check and a new line · * – times · ^ – power, ↓ – end of the power

            / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – a new line · * – times · ^ – power, ↓ – end of the power

            A monthly budget

            A monthly budget is a plan of the income and the expenses of a month.
            The Levi family brings in 14000 ₪ net a month: 8000 ₪ and 6000 ₪, from two salaries.
            These are its monthly expenses, in shekels:

            RentFoodTransportBillsLeisureOther
            50003500150010001200800
            38.5%Rent26.9%Food11.5%Transport7.7%Bills9.2%Leisure6.2%Other
            • All the expenses: 5000+3500+1500+1000+1200+800=13000\displaystyle {5000+3500+1500+1000+1200+800}={13000} ₪.
            • What is left is the savings: 14000−13000=1000\displaystyle {14000-13000}={1000} ₪ a month.
            • The pie chart shows each expense’s part of all the expenses: the rent is more than a third of them, the largest expense.
            A savings goal

            The Levi family wants to buy a laptop for 3600 ₪, from its savings alone.

            • After 3 months it will have 3⋅1000=3000\displaystyle {3\cdot1000}={3000} ₪ – not enough.
            • After 4 months – 4000 ₪. It can buy it.

            To buy it sooner, save more: cut down on leisure, say. If leisure costs 600 ₪ instead of 1200 ₪, the savings are 1600 ₪ a month, and in 3 months there are 3⋅1600=4800\displaystyle {3\cdot1600}={4800} ₪.

            Exercise 3

            Yoav is in grade 10.
            Every month he gets 400 ₪ pocket money, and earns 1200 ₪ at a job.
            These are his expenses in a month, in shekels:

            Eating outTransportPhoneClothesLeisure
            45020080300400
            31.5%Eating out14%Transport5.6%Phone21%Clothes28%Leisure
            a

            What are all Yoav’s expenses in a month?

              / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – check and a new line · * – times · ^ – power, ↓ – end of the power

              / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – a new line · * – times · ^ – power, ↓ – end of the power

              b

              How much does he save a month?

                / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – check and a new line · * – times · ^ – power, ↓ – end of the power

                / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – a new line · * – times · ^ – power, ↓ – end of the power

                c

                What percent of his income does he spend on leisure?

                  / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – check and a new line · * – times · ^ – power, ↓ – end of the power

                  / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – a new line · * – times · ^ – power, ↓ – end of the power

                  d

                  Yoav wants to buy a bike for 1700 ₪ from his savings.
                  Write an equation and solve it: how many months does he need to save?

                    Exercise 4

                    The Levi family’s rent went up by 10%.
                    The rest of its income and expenses stayed the same.
                    How much will the family save a month now?
                    How many months will it take now to save 3600 ₪ for the laptop?

                      / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – check and a new line · * – times · ^ – power, ↓ – end of the power

                      / – fraction bar · Tab or the arrows – between numerator and denominator, then a note above or below · Enter – a new line · * – times · ^ – power, ↓ – end of the power