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National Gambling Board

South African Responsible Gambling Foundation

Money Issues - Personal Finances

BlackboardBy the end of this Unit you will be able to:

  • Essentials and luxuries
  • Drawing up your own budget

Topic 1: Essentials and Luxuries

In terms of the Constitution of our country which was adopted after the first democratically elected government in 1994, all people in South Africa are entitled to the basics of life. These are defined as the right to education, health, food security and housing. We would probably all agree that these are essential for life in a modern society.

Word Box

Constitution:  the document that lays down the rules
and laws about how our country should be run, and describes
all people’s basic rights
Essential:  absolutely necessary
Luxury:  something we do not absolutely need but may wish to have

There is great variety of wealth in South Africa. There are some extremely rich people who can afford many luxuries. On the other hand we have the poorest of the poor – street people who live on hand-outs and sleep on pavements at night. In other words, these people do not even have enough for the most basic essentials.

Did you know?

More than 4 million South Africans live in poverty in South Africa according to government figures in 2008. In terms of money per person per month, this is below R431 in terms of 2006 figures.

The South African government is concerned about poverty and the ANC has committed itself to waging war on poverty. Nonetheless many people live on very small amounts of money and really struggle to survive.

Activity 1: What I need...What I want....

In your pairs, look at the list of items below. On a piece of paper draw two columns. Label one “Essentials” and the other “Luxuries”. Now place each item in one of the columns. 
When you have completed this, compare your list to those of the other pairs in the class.
Were all the lists identical? If there were differences discuss these.
Do you think we all have the same opinion about what makes something a luxury or an essential?
If there are differences why do you think these arise?

Luxury or essential?

Clean water Flushing toilet

Running hot water

Fresh meat School uniform Sweets
Vegetables Fruit Clothes
New shoes Jewellery


Shampoo Soap Toilet paper
School fees Car

Educational books

Newspapers Radio


You can probably see from this Activity that our ideas about what is a luxury item differ. This is often because we are used to a certain life style in which we take things for granted that some people would see as luxuries.  A reasonably wealthy person may well see having a car as an essential whereas someone who earns very little will have to spend most of his or her money on basic items such as food and basic clothing and may only be able to afford public transport if there is money left over.

Talking Point!

Sipho gets R100 a month pocket money that he can spend as he wishes. One day he really wants the latest 50 Cents hit CD. It costs R149. He decides to steal it because he cannot afford it. He is caught by the police and is sentenced to six months in jail.

Ms Nzenge has a family of four young children. She works as a domestic worker and earns R2 000 per month. One day her baby, Fikile is very ill and needs medicine. She cannot afford to buy it. She sees her employer’s purse on the table and takes R200 from it to buy the medicine. She is caught and handed over to the police and sentenced to six months in jail.

  • Do you think both people should be punished equally?
  • Why or why not?
  • Which person wanted a luxury item?

By now you should be able to see that money is a complicated issue. Poverty can lead to desperation and many social ills. Many studies link poverty to crime and other social problems like gangsterism and alcohol and drug abuse.

Not all people can find work and unemployment in South Africa is a great social problem. Very poor people sometimes cannot even afford education and this means that they leave school with few qualifications which makes them even less likely to be able to find a job – this leads to a cycle of poverty which can be difficult to break.

Did you know?

Unemployment in South Africa is at least 20%. This means that more than 20% of people of an age to work (18 to 60) are unemployed.

Topic 2: Drawing up your own budget

As we have already seen, money is limited and most people have to work according to a budget – a set amount of money. This means making decisions about money, a topic which we have also looked at.  Now we are going to look at drawing up a personal budget.

Did you know?

Read what a Financial Expert has to say about why
we should all have a budget:

  1. A budget helps you reach your goals (and keeps you from getting side-tracked).
  2. A budget lets you control your money instead of your money controlling you.
  3. A budget will tell you if you’re living within your means.
  4. A budget can help you meet your savings goals.
  5. Following a realistic budget frees up spare cash.
  6. A budget helps your entire family focus on common goals.
  7. A budget helps you prepare for emergencies.
  8. A budget can improve your personal relationships.
  9. A budget reveals areas where you’re spending too much money.
  10. A budget can keep you out of debt or help you get out of debt.
  11. A budget actually creates extra money.
  12. A budget helps you sleep better at night.

Adapted from :-

All of us have a certain amount of money that we need to make decisions about. For the poorest of the poor this may not even be a regular income, such as from a grant, but they still have to decide on what to spend what little money they do get.

Talking Point!

Some religions insist that people give to charities. Do you think we all have a responsibility to give something to people who are worse off than ourselves? Should this be part of all of our budgets? Would it be a part of your budget? Why or why not?

Making decisions about how to spend your money can be very difficult especially if this is limited and many people have to be taken into account. The Activity below will help you with decision making around money.

Activity 2: Decisions, decisions........

Individual and Small Group
Imagine you have an amount of R150 a month to spend as you wish. Your basic needs such as children’s school clothing, food, shelter and travel are taken care of, so this is money to spend as you wish.

1) Draw up a list of what you would spend your money on.
Create an illustrated poster that shows what you would spend your money on.

2) Now imagine that your income is reduced and you only have R75 a month to spend as you wish. Look at the list and poster you have made. What would you cut down on? In order to do this you would need to make certain decisions. Look back at the section on making decisions and see how this can help you to re-budget.

3) When you have completed your revised list compare your budget with those of another two group members. Are there any similar items? Can you explain why your lists may be similar or different? Spend some time discussing this in small groups.

As you can see we all have different ideas about what to spend our money on. Money that is freely available to be spent on whatever you like is known as disposable income. The amount of disposable income each person has will vary enormously. Some parents, who have a great deal of disposable income, may still give their children a limited amount of money to spend. This is because they think that learning to budget carefully from an early age is a good lesson to learn.

Activity 3: Role Play

Imagine that you work three days a week and earn R150 per day. Your employer calls you in and tells you that she is going to have to reduce your time to two days a week.
In Pairs role play the conversation that might take place between you and the employer.
As the employer you will have to listen carefully and ask questions; as the person working or the employee, you will have to give good reasons as to why you need to keep working three days a week.

Sometimes we place value on things because they are rare or have importance for us because of who gave them to us. Such items that are not necessarily very expensive but that we value are known as having sentimental value.

Word Box:

Sentimental: appealing to our feelings


Talking Point

Imagine that many years ago your grandmother gave your mother her gold wedding ring. When you turned 18 your mother gave it to you and you have worn it every day since then. It has great sentimental value to you. Recently you saved enough money to buy a cellphone. You are extremely proud of the fact that you now own this and worked hard for it. One day while walking home from work you are mugged by a group of youths who demand something of value. What would you give them: - your ring or your cellphone?

How would you make this decision?


Self Assessment Checklist:

  • I can now describe and discuss the difference between essential and luxury items
  • I can now understand why we need to budget
  • I can now draw up my own personal budget
  • What did you enjoy most about this Unit?
  • What did you enjoy the least about this Unit?