MONEY MANAGEMENT: Calculations and Change

For a kid who’s ready to get out there, launch their business and finally make some money, the one essential skill you’re going to need and use regularly is your quick mathematics skills. By mathematics we mean well, Mathematics hahaha! Jokes aside, your capability to do calculations; calculating a customer’s change, calculating your profit, discounts, losses, employee payments etc.

Calculations are important since they involve your money. If you do it wrong, you hurt yourself and your business financially. Consider a situation where you have 3 customers ordering some snacks from your bakery shop and they are all in a hurry. Since you are working alone you end up caving to the pressure of making the orders quickly and you fumble your calculations and give a customer a higher balance than was required. This is with the assumption that, not all your customers have the integrity to return extra change. This is a very realistic scenario and having a couple of this could be devastating to your business. Could you imagine, your business always giving money to customers for free!

Sometimes it’s not even about pressure but laxity on your end on not working on your Maths and calculation skills. Probably telling yourself lies that you don’t need to know Maths because as long as people are buying your stuff your business is successful. And you couldn’t be more wrong. Selling doesn’t always mean you are making a profit. You could be selling your stuff at a loss because you are selling them at a lower price than you bought them. With your lack of interest to do your own calculations, you miss the fact that, you’re going at a loss because you didn’t account for extra charges like transport, tax, packaging costs, water or electricity bills (if the business uses them) etc.

There are a lot of factors to consider when deciding how to price your products and make a profit. And most of this can be accomplished by sitting down and doing your own business calculations to find a solution. After all, it is a business and it’s supposed to make your life better financially not worse!

On Saturday during the Amazing Kids session, we did a lot of business scenario calculations to juggle our minds on what was to come for our own businesses.

Since you’re on of us too, we can leave you with one of the scenarios we solved in class to see if you can get the correct answer too. Feel free to post your answer in the comment section below!

Scenario: A packet of biscuits costs Ksh. 50 and a bottle of soda goes for Ksh 100. Lora buys 5 packets of biscuits and 2 bottles of soda. She pays the seller with a Ksh 1,000 note. How much change should Lora get from the seller? (Tip: Imagine yourself as the seller)

Oh, this was our running memory verse for the day. Psalms 37:4.

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