Understand and work out the true cost of spending Topic 6 Understand and work out the true cost of spending

Learning Intentions After this topic you will be able to: Understand the term ‘Value for Money’ Understand Discounts and Special Offers Understand why some products are more expensive than similar ones Understand taxes and hidden charges Work out the true cost of spending

Cost of Purchases Everything that we buy has a cost. Most items in shops will have a price label and we expect to pay the price stated. Sometimes we can negotiate on the price of the goods and services we buy. We can buy both goods and services. Goods are things that we can physically touch (tangible) whereas are things which help us but are intangible.

Value for Money Value for Money mean that you feel that you have paid a fair price for what you have purchased. The cheapest is not always the best deal or value for money – Why? Value for Money means different things to different people. Some people may be willing to sacrifice quality to save some money whereas other people may be willing to spend more to ensure they have bought a quality product.

Shopping Around Most people will not just buy the first thing they see when shopping. It makes sense to shop around to get the best deal. People can do this by: Searching the Internet Going from shop to shop Looking at catalogues

Price Comparison Websites Price comparison websites can make it easier for you to find the best possible deal. These site will collect prices from other websites and let you have a summary of the best ones. Not all companies allow their products to be shown on price comparison websites ie Direct Line.

Task 6c – Page 103 Complete this task on Price Comparison websites. Think of a product you would like/need. Use price comparison websites to find the best price. Display your findings on a table

Shop Discounts and Offers These are a good way of getting things for a lower price. A discount means getting money off the price. For example: A shop has been selling tables for £200. The owner will be receiving new stock and decides to sell the old stock of tables at a discount. He has decided to sell them at a discount of 25%. Cost £200 less 25% discount (£200 x 25%) £50 New Selling Price = £150

Other Ways to save Money Students Discounts Staff Discounts Special Offers (BOGOF) Collecting money off Coupons Buying goods in bulk Loyalty Cards

Activity 6d Calculate the prices on the items.

Labels Everything has a label , or a name telling you which manufacturer made the product or which shop sold it. Certain labels are better known than others – better quality, more fashionable etc. People often pay extra for a “label” even if there is a similar product of the same quality available. Armani Rolex Apple Mac Thornton’s Easter Egg Cristal Champagne

Activity 6e Complete the table on value for money

Opportunity Costs Opportunity Cost is what you give up to get something else. You may decide to forego a holiday this year in order to pay for a season ticket for the team you support. The opportunity cost of the season ticket is the holiday you will no longer be able to have.

Activity 6f Complete the questions on Opportunity Cost.

Taxes on what we spend- VAT The government charges a tax on the goods and services we buy which will make them cost more. The main expenditure tax in the UK is VAT. The money raised helps to pay for public services Standard rate 20% Reduced rate 5% - gas electricity, domestic fuel Zero Rate – food, childrens clothes, childrens shoes, books, newspapers and magazines

Duties Some items such as: Cigarettes Alcohol Petrol Are subject to another type of tax called ‘duty’. The reason that the government charges duty on these items is to discourage us from buying them, or to make them so expensive that we buy less of them. Why do you thing the government wants us not to buy or buy less of these items.

Insurance Premium Tax (IPT) When people buy insurance they pay a premium. This is the amount that they pay to the insurance company to cover the risk of theft, fire, illness, lost luggage etc. The government charges a tax on this premium called Insurance Premium Tax.

Hidden Charges When you are shopping online or over the telephone, the price you see on the label is sometimes not the total cost of your goods. You may also have to pay the following hidden charges Postage and package Import duty (Customs Charges) Booking fees Service charges Online shopping charges

Today ……………. Complete Activities 6h and 6i Read through the Topic 6 notes again and then complete the Review Questions Complete the Learning Activities on Page 117

Topic 7 – Money to Make Money Shares Premium Bonds – www.nsandi.com – ERNIE Electronic random number indicator equipment 1-24000 win with Premium Bonds UK Lottery – six numbers run by Camelot – money raised for good causes and some given to the government – www.biglotteryfund.org.uk 1-13,983,816 to win on the lottery jackpot 1-54 can win something – www.national –lottery.co.uk

Gambling Addictive You need to have a ‘stake’ of some kind Winning unlikely Risky Not reliable Large losses

Other investments – www.bbc.co.uk – go to Business pages Gold Antiques Paintings Prints Stamps Precious stones Jewellery Silver Coins Good and bad points of each – what can happen investing in the above?

Using Money Abroad – Foreign Money Calculations Currency what is it? Unit of money you use in different countries The Euro – used by 16 of the 27 countries in the European Union – Collectively known as the eurozone – the euro is the legal tender of the eurozone Micro states – Andorra, Monaco, San Marino, The Vatican City

Exchanging money You need an exchange rate to buy and sell – popular currencies have high exchange rates (good for the country you are visiting) Areas that are not so popular to visit have heavier charges To Calculate : Exchange rate and the amount in Sterling Look at the calculations on page 132 to convert back you have to divide see page 133 – 135 What is commission?

Paying abroad Notes Coin Travellers cheques – in Sterling, US Dollars, Euros, Canadian Dollars Plastic cards Travellers Cheques Safer – Expensive to get and cash

Exchanging abroad Banks Bureau de change Hotels Shops You risk losing money when converting back to sterling

Using Plastic – Debit Card You can use at ATM’s Shops and Hotels Look for Cirrus, MasterCard or Visa

Using Plastic – Credit Card Currency Converted as you need it – to sterling You will see what comes off in your next statement