Level 2
Unit No:
Guided learning hours:
48 hours

Assessment Guidance

Portfolio of Evidence

Unit Learning Outcomes


Understand what is meant by income and expenditure in relation to personal finances.

Personal income: money coming in to a person or household. Personal expenditure: money going out from a person or household.Wages/salary, commission, investments, dividends, pensions, social welfare benefits.

Living expenses (food, clothing, entertainment), accounts (water, electricity, gas, telephone), insurance (car, house), taxes, loan repayments.

Personal circumstances may include: family structure, health, job choice, age.

Assessment Criteria

  • 1.1

    Define the terms "income" and "expenditure" in relation to personal finances.

  • 1.2

    Outline different sources of income in relation to personal finances.

  • 1.3

    Outline items of expenditure for a typical household.

  • 1.4

    Describe how income and expenditure can be affected by personal circumstances.


Know ways to manage a limited budget.

Planning expenditure to avoid getting into debt, controlling costs, planning a budget, maintaining a good credit score, generating income, setting financial goals, countering the effects of inflation; separating needs from wants.

Making and keeping to a budget, saving, monitoring bank account, spending within set limits; shopping around for the best deal.

Assessment Criteria

  • 2.1

    Identify the factors to be considered when managing a limited budget.

  • 2.2

    Compare ways of managing a limited budget effectively in a particular situation; for example young family, student.


Know how to undertake financial transactions.

Cash, debit card, credit card, Direct Debit, Standing Order, online bank transfer, store cards, finance (also under borrowing).

Convenience, required by seller, available online, safety, availability of internet connection.

Assessment Criteria

  • 3.1

    Describe different kinds of financial transaction and their purpose including personal banking and methods of payment.

  • 3.2

    Explain why different methods of carrying out financial transactions are used in different circumstances


Understand key financial information on everyday documents.

  • Proof of financial transaction. Key information: seller’s company details including name, address, phone number and/or email address; date of transaction showing date, month and year; list of products or services, price and quantity sold, VAT.
  • Total pay before deductions ('gross amount'), total pay after deductions ('net amount'), amounts of any 'variable deductions', where the amounts depend on the amount of pay, for example tax, National Insurance, Student Loan repayments and pension schemes. Included for personal information and for tax purposes.
  • Date (date of transaction), Description (outline of transaction), Money In (income), Money Out (expenditure), Balance (amount remaining after transaction). These details are important to keep track of transactions and manage money. DD (Direct Debit), DR (account overdrawn), INT (interest), SO (Standing Order), TFR (Transfer between accounts).
  • Check facts and figures are correct on receipts before leaving the shop or as soon as paid online; Check facts and figures on payslip are correct as soon as receive it; check Money In on bank statements against wages/salary slips or other relevant proof of income; check Money Out of bank statements against stored receipts.
  • Access to gov.uk personal tax account to: check your Income Tax estimate and tax code; fill in, send and view a personal tax return; claim a tax refund; check and manage your tax credits; check your State Pension; track tax forms that you’ve submitted online; tell HMRC about a change of address; find your National Insurance number.

Assessment Criteria

  • 4.1

    Understand the purpose of a receipt and identify key information on it.

  • 4.2

    Describe key items recorded on a payslip and state why each item is included.

  • 4.3

    Explain the importance of a bank statement.

  • 4.4

    Describe how financial information can be checked for errors.

  • 4.5

    Outline information stored on a gov.uk personal tax account.


Know about saving, investing and borrowing.

  • Benefits of saving and investment: will achieve financial independence sooner, less worry if unforeseen expenses arise, financial back-up in place if job is lost, have options if circumstances change, more comfortable in retirement.
  • ISAs, savings accounts, shares, pensions.
  • Overdrafts, personal loans, credit cards, payday loans, mortgages, family, friends and partner.

Assessment Criteria

  • 5.1

    Explain the benefits of saving and investment.

  • 5.2

    Compare ways to save and invest money, describing which is preferable in different circumstances. 

  • 5.3

    Explain the benefits and drawbacks of methods of borrowing money.


Be able to produce a budget and review actual performance against it.

Having a budget gives control over money, keeps you focused on financial goals, makes you aware of how you spend money; helps to save for one-off high-cost items, provides you with early warning for potential problems, enables you to eliminate unnecessary spending.

Calculate expected income; create list of monthly outgoings; determine fixed and variable outgoings.

Total your actual monthly income and outgoings, compare to budgets income and outgoings.

Assessment Criteria

  • 6.1

    Explain the benefits of having a budget.

  • 6.2

    Assess likely spending and income over a given period.

  • 6.3

    Compare budgeted spending and income against actual spending and income.


Be able to identify sources of help with personal finances.

Money Advice Service, Citizens Advice, IFAs. Gov.uk website.

Assessment Criteria

  • 7.1

    Provide examples of help available to an individual in relation to personal finances and personal debt.