Texas Essential Knowledge and Skills (TEKS):
7.4.D

solve problems involving ratios, rates, and percents, including multi-step problems involving percent increase and percent decrease, and financial literacy problems; and

Texas Essential Knowledge and Skills (TEKS):
7.13.A

calculate the sales tax for a given purchase and calculate income tax for earned wages;

Texas Essential Knowledge and Skills (TEKS):
7.13.B

identify the components of a personal budget, including income; planned savings for college, retirement, and emergencies; taxes; and fixed and variable expenses, and calculate what percentage each category comprises of the total budget;

Texas Essential Knowledge and Skills (TEKS):
7.13.C

create and organize a financial assets and liabilities record and construct a net worth statement;

Texas Essential Knowledge and Skills (TEKS):
7.13.D

use a family budget estimator to determine the minimum household budget and average hourly wage needed for a family to meet its basic needs in the student's city or another large city nearby;

Texas Essential Knowledge and Skills (TEKS):
7.13.E

calculate and compare simple interest and compound interest earnings; and

Texas Essential Knowledge and Skills (TEKS):
7.13.F

analyze and compare monetary incentives, including sales, rebates, and coupons.

7th Grade Math - Personal Financial Literacy Lesson

TAXES

In general, a monetary tax is an amount of money required to be paid by a person or business to a government.

Sales tax is a tax on goods and services. Sales tax is typically a percentage of the amount spent on a purchase. Income tax is a tax on one's earnings. Income tax is typically a percentage of one's income.

Example:

First, find 8.5% of the amount Skyler spent to find the amount of sales tax.

8.5% of $51.50

=

0.085 × $51.50

≈

$4.38

Then, add the sales tax to the amount Skyler spent.

$51.50 + $4.38 = $55.88

So, Skyler spent $55.88 total.

Stores and manufacturers often use incentives to encourage customers to buy their products. These include coupons, rebates, and sales.

A person can save the most money by using incentives to receive the greatest discount.

A budget is an estimate of income and expenses for a given period of time.

A personal budget includes:

Income

Planned savings, for things like college, retirement, or emergencies

Taxes

Fixed expenses

Variable expenses

For a budget to be balanced, the income must equal the expenses.

A financial asset is something that has a positive monetary value because of a contractual claim. Cash, savings, stocks, and bonds are financial assets.

A financial liability is a debt or obligation that is settled over time by the transfer of money, goods, or services. Loans, mortgages, and taxes are financial liabilities.

Simple interest can be calculated using the formula below, where I is the interest, P is the principal, r is the interest rate, and t is the time in years.

I = Prt

Compound interest can be calculated using the formula below, where A is the final amount, P is the principal, r is the interest rate, and t is the time in years.

A = P(1 + r)^{t}

Example:

Use the compound interest formula to find the amount of money after 5 years.