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Budgeting & Best Deals0%

Finance · Topic 3 of 5

Budgeting & Best Deals

Video coming soon3 worked examples

Theory

The Golden Rule: When an exam question asks you to determine the "best deal" or the "lowest price" across three different shops, you MUST show the full calculation and final price for all three options. If you only calculate two options and guess the third, you will lose the final justification marks.

1. Balancing Outgoings & Saving Up

You will often be asked to balance a person's income against their outgoings (rent, bills, food) to find out how much they can save.

  • Calculating Minimum Weeks: If you are asked how many weeks it takes to save for an item, divide the total target amount by their weekly savings.
  • The Rounding Rule: You must always round UP to the next whole week. If your calculation gives 14.1 weeks, it means 14 weeks is not quite enough, so it will take 15 weeks to reach the target.

2. Profit & Loss

  • Profit: Made when total Income is greater than total Expenditure.
  • Loss: Made when total Expenditure is greater than total Income.
  • Percentage Profit/Loss: Remember your Numeracy skills here! Always divide the actual profit or loss by the original purchase amount (Expenditure), then multiply by 100:
% Profit or Loss=Profit or LossOriginal Amount×100\%\ \text{Profit or Loss} = \frac{\text{Profit or Loss}}{\text{Original Amount}} \times 100

    3. Best Deals & Comparing Offers

    You must confidently navigate complex promotional offers to find the cheapest overall price for a set quantity of items.

    • "Buy X, Get Y Free": Group the items. If an offer is "Buy 3, get 1 free", they are sold in groups of 4, but you only pay for 3. Divide your total required amount by the group size (4) to find out how many groups you need.
    • "Percentage Discount on Totals": Calculate the full price first, then apply the percentage discount multiplier (e.g., for a 30% discount, multiply the total by 0.70).
    • Comparing Sizes: If comparing different sizes of the same product, always scale them to match (e.g., find the price per 100g, or price per kilogram).

    ⚠️ Common Examiner Traps

    • The "Incomplete Comparison" Trap: a common way to lose justification marks is by only calculating the price for Shop A and Shop B, completely ignoring Shop C because it "looks" more expensive. You must write down a final total for all three.
    • The "Rounding Down" Savings Trap: When finding the number of weeks required to save up, candidates often round using normal mathematical rules (e.g., rounding 12.3 down to 12). If you need 12.3 weeks of savings to afford a holiday, 12 weeks of saving will leave you short of money. You must round up!
    • The "Missing Conclusion" Trap: Candidates often do all the complex calculations perfectly, but fail to write a final sentence stating clearly which shop/deal is the cheapest. The final mark is always for communication.

    Worked examples

    Example 1

    Josh earns £12.50 per hour and works 28 hours a week. His weekly outgoings for rent and bills total £245. Josh saves all his remaining money. He wants to book a holiday costing £680, and he wants to take £450 in spending money. Calculate the minimum number of weeks it will take him to save the total amount. (4 marks)

    Step 1: Calculate Josh's total weekly income.

    28×£12.50=£35028 \times \pounds12.50 = \pounds350

    Step 2: Subtract his outgoings to find his weekly savings.

    £350−£245=£105 saved per week\pounds350 - \pounds245 = \pounds105 \text{ saved per week}

    Step 3: Calculate the total amount he needs to save.

    £680+£450=£1,130\pounds680 + \pounds450 = \pounds1,130

    Step 4: Divide the total target by his weekly savings.

    £1,130÷£105=10.7619... weeks\pounds1,130 \div \pounds105 = 10.7619... \text{ weeks}

    Step 5: Contextual rounding. 10 weeks is not enough, so he must save for another week.

    Final Answer: 11 weeks.

    Example 2

    Rab needs to buy 24 boxes of wooden flooring. He looks at three different shops.

    • Shop A: £22 per box. Special offer: Buy 3 boxes and get a 4th box free.
    • Shop B: £28 per box. Special offer: 35% discount on the total price when 20 or more boxes are purchased.
    • Shop C: £16.50 per box. No special offers.

    Determine the lowest price for buying 24 boxes of flooring. Use your working to justify your answer. (4 marks)

    Step 1 (Shop A): The offer is in groups of 4 boxes, but you only pay for 3. How many groups of 4 are in 24 boxes?

    24÷4=6 groups24 \div 4 = 6 \text{ groups}

    He needs to pay for 3 boxes in each of those 6 groups:

    6×3=18 boxes to pay for6 \times 3 = 18 \text{ boxes to pay for}

    Total for Shop A: 18×£22=£39618 \times \pounds22 = \pounds396

    Step 2 (Shop B): Calculate full price, then apply the 35% discount (Multiplier = 0.65).

    Full price=24×£28=£672\text{Full price} = 24 \times \pounds28 = \pounds672
    Discounted price=£672×0.65=£436.80\text{Discounted price} = \pounds672 \times 0.65 = \pounds436.80

    Step 3 (Shop C): Calculate the straightforward price.

    Total for Shop C=24×£16.50=£396.00\text{Total for Shop C} = 24 \times \pounds16.50 = \pounds396.00

    Step 4 (Conclusion): Shop A and Shop C tie for the lowest price at £396.00. (Note: You must explicitly state the cheapest shop(s) to get the final mark!)

    Example 3

    A school tuck shop spent a total of £145.50 buying a bulk box of 60 premium chocolate bars (including delivery). They sold 32 of the bars at £2.50 each. They sold 18 of the bars at a reduced price of £1.50 each. The remaining bars passed their expiry date and had to be thrown away. Calculate the percentage loss the tuck shop made on this box. (4 marks)

    Step 1: Calculate the total income from sales. (32×£2.50)+(18×£1.50)(32 \times \pounds2.50) + (18 \times \pounds1.50)

    £80.00+£27.00=£107.00 total income\pounds80.00 + \pounds27.00 = \pounds107.00 \text{ total income}

    Step 2: Calculate the actual financial loss.

    £145.50−£107.00=£38.50 loss\pounds145.50 - \pounds107.00 = \pounds38.50 \text{ loss}

    Step 3: Express the loss as a fraction of the original purchase price, and multiply by 100.

    (38.50÷145.50)×100=26.4604...%(38.50 \div 145.50) \times 100 = 26.4604...\%

    Final Answer: They made a 26.5% loss (rounded to 1 d.p.).

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    11 Budgeting and Best Deals questions with answers and video solutions