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Building number confidence: Budgeting

1. Money and budgeting basics

Money

Money exists in numerous forms, including physically as coins and bank notes, and digitally in bank accounts and credit cards. It is used to pay for goods and services.

four coins

UK coins come in several values (1p, 2p, 5p, 10p, 20p, 50p, £1 and £2) and are designed in various sizes, shapes and colours to make it easier to tell them apart.

The Bank of England issues notes for larger values, each with a different colour and design: blue for £5, brown for £10, purple for £20, and red for £50.

These same principal colours are used in the design of notes from the three issuing banks in Scotland (Bank of Scotland, Clydesdale Bank and Royal Bank of Scotland).

Explore current designs via the following external webpages:

 

Currency

The 'currency' of a country, or economic area, is the money system in use and its standard unit of value.

The UK's currency is Sterling - or 'Pound Sterling', after its main unit, the pound. The pound sign (£), or the international currency code GBP, denote values in Sterling.

The UK uses a decimal system for money. One pound is made up of 100 pence (p), so 50p is half of a pound, and 1p (one penny) is one hundredth of a pound.

This means pounds and pence work like whole numbers and decimals. For example, £1.50 means 1 pound and 50 pence.

Converting between pounds and pence

Pence into pounds: divide the number of pence by 100. For example, 125p is £1.25.

Pounds into pence: multiply the number of pounds by 100 (tip: move the decimal point 2 places to the right). For example, £3.75 is 375p.

 

Budgeting

Budgeting - keeping a track of your money, your income and expenditure, planning and making decisions about spending and saving - helps you to stay in control and meet your financial goals.

Budgeting involves using everyday numeracy skills and operations. For example:

  • You use addition to add up your income from different sources or total your spending over a week or month.
  • You use subtraction to work out how much money you have left after paying for bills and other expenses.
  • Sometimes, you might need to use multiplication to plan for regular costs (like a weekly payment across a month), or division to split your money into savings or spending categories.
  • You may also use rounding to estimate costs or check whether you have enough money to cover a purchase without needing to calculate the exact total.

Building confidence with these simple operations makes it easier to manage your money. If you need to work on these skills, check out our other course: Number Confidence for Everyday Life.

 

 Budgeting check

Harry grows courgettes in his garden but always has more than he needs. He sells 13 courgettes to friends and family at 50p each, which he will donate to charity.

How much money will he be able to donate in pounds and pence?

To find out how much money Harry will donate, multiply the number of courgettes sold by the price of each courgette:

13 courgettes × 50p = 650p

Now, convert pence into pounds and pence. There are 100 pence in £1:

650 ÷ 100 = £6.50

Harry will be able to donate £6.50 to charity.