Personal finance

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Zabi Zamani


It is important to plan the finance for any regular expenditure such as the basic needs of any person like food, clothes, accommodation, bills etc.

To be able to for fill all your personal needs you must have some kind of personal income, which will cover these expenses.

The sources of personal income might be:

Salary or wages

A regular earned income from employment, for these earnings the employee and the employer both have to pay a deduction to the government such as income tax and N.I. contribution.


An extra earned income for the additional hours of work


An employee can get a percentage of the selling price of product from his/her employer.


Bonus is an earning for good performance at work place.


Interest using your money to create more money, expressed as a rate per period of time, usually one year, in which case it is called an annual rate of interest.


You may win money from playing the lottery or gambling on sport events.


Money received from a friend or relative on a special occasion such as birthday.

Sale of personal items

Earned income from selling personal items

Gross and net pay

Gross pay is the total amount of money earned by an employee before any deduction is made.

Net pay is the amount of money an employee receives after deduction have been made for income tax, national insurance and any voluntary contribution such as pension contribution.

Regular and irregular earned income

Regular earned income

This is the income earned by a person on a regularly basis e.g.


Interest on savings

Irregular earned income

Irregular earned income is the money what you receive occasionally, these can be payments that the employee may be entitled to but which are not received on a regular basis such as commission, bonus and overtime.

Other examples of irregular income can be:

Sale of personal items at car boot sale


Additional weekend or holiday work


Some expenses are arguably more important than other – opinions differ but the general consensus is that you must pay:

Rent – this varies according to type of accommodation, location and duration of lease.

Food – this depends on your appetite and your style of living.

Fuel – i.e. electricity, gas and water

Telephone – this is definitely controllable but can run away with the money, particularly mobiles.

Socialising – going out, buying tickets for special events or cinema.

Laundry – can sometimes be quite costly especially if you are keen on sport.

Other expenses – these are inevitably and unique to you e.g. smoking, clothes, car expenses, CD’s/ DVD’s, sports etc.

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Difference between everyday expenditure and contingencies

Everyday regular expenditure includes payments for accommodation; for example rent or mortgage. Also payments for travel such as bus and train fairs, and petrol expenses for car.

Contingencies are unexpected spending and would need sufficient savings to ensure that the result would not be a large debt. An example of a contingency is if your car broke down you would need to pay for the repairs. If there is no savings for contingencies then there might not be sufficient money available to meet regular expenditure.


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