Financial maths is needed for all jobs, from calculating wages to working out profit, loss and VAT. Knowledge of financial maths is also required to be able to understand bank statements and savings.
The different parts of a payslip and calculating deductions are explored
Wages are paid by an employer to their staff in return for work. Wages are usually paid weekly or monthly. They are either calculated on a rate of pay per hour or as an annual salary.
In Britain, people should be paid at least the minimum wage rate set by the government. The value of the minimum age varies depending on whether the person working is an apprentice, under the age of 18, or an adult.
If a person earns £5.52 and works 10 hours per week, they would earn £55.20.
Be careful when using a calculator for any financial maths. The previous example on a calculator would be \(5.52 \times 10 = 55.2\) which doesn't make sense.
Ensure that the solution satisfies the normal rules of using money. That means showing the correct units and leaving any amounts left in pounds to 2 decimal places to represent the pence.
In some jobs, people may be paid for any extra hours they work or overtime.
Example
Complete the table.
Name
Rate of pay per hour - basic wage
Number of hours worked
Rate of pay per hour - overtime
Number of hours worked
Total wage
Sophia
£2.73
8
£4.00
3
£33.84
Asa
£5.13
12
£6.50
5
Owen
£6.50
15
£8.20
£179.50
Name
Sophia
Rate of pay per hour - basic wage
£2.73
Number of hours worked
8
Rate of pay per hour - overtime
£4.00
Number of hours worked
3
Total wage
£33.84
Name
Asa
Rate of pay per hour - basic wage
£5.13
Number of hours worked
12
Rate of pay per hour - overtime
£6.50
Number of hours worked
5
Total wage
Name
Owen
Rate of pay per hour - basic wage
£6.50
Number of hours worked
15
Rate of pay per hour - overtime
£8.20
Number of hours worked
Total wage
£179.50
To work out Asa's total wage for the week, multiply the hourly rates by the hours worked: \((\pounds 5.13 \times 12) + (\pounds 6.50 \times 5) = \pounds 94.06\)
To work out how much overtime Owen did, firstly, find Owen's basic wage:
\(\pounds 6.50 \times 15 = \pounds 97.50\)
Find the difference between the basic wage and total wage: