Calculating with Money

How money is written

We write amounts of money using a decimal point. The pound sign £ goes in front, then the pounds, then a dot, then the pence.

• £3.45 means 3 pounds and 45 pence.
• The two digits after the dot are always the pence.

There are 100 pence in 1 pound, so £1 = 100p. This is just like place value: the pence are smaller pieces of a pound, the same way that 100 cm make a metre. If you are new to coins, it helps to read Money: Counting Coins and Change first.

Pounds and pence both ways

Sometimes an amount is given in pence and we want pounds, or the other way round.

• Pence to pounds: divide by 100 (move the digits two places). 350p ÷ 100 = £3.50.
• Pounds to pence: multiply by 100. £2.06 × 100 = 206p.

Watch the zeros carefully: £4.05 is 405p, not 45p. The 0 is holding the tens place.

Adding money

To add amounts of money, write them in a column and line up the decimal points. That keeps pence under pence and pounds under pounds.

Worked example 1

Add £5.60 and £2.75.

  £5.60
+ £2.75
-------

1. Add the pence: 60 + 75 = 135 pence. That is 1 pound and 35 pence, so we write .35 and carry £1.
2. Add the pounds: 5 + 2 + 1 (carried) = £8.
3. Answer: £8.35.

Subtracting money

Subtraction works the same way: line up the points and take the bottom amount from the top.

Worked example 2

A coat costs £18.50. It is reduced by £6.30. What is the new price?

  £18.50
−  £6.30
-------
  £12.20

The new price is £12.20.

Working out change

Change is what you get back when you pay more than something costs. There are two good methods.

Method A — subtract. Take the cost away from the money you handed over.

Method B — count up. Start at the cost and count on to the amount paid.

Worked example 3

You buy a book for £7.30 and pay with a £10 note. What is your change?

Subtracting:

  £10.00
−  £7.30
-------
   £2.70

Counting up: from £7.30, add 70p to reach £8.00, then £2 to reach £10.00. That is 70p + £2 = £2.70. Both methods agree: your change is £2.70.

A multi-step shopping problem

Real money problems often have more than one step. Take them one at a time.

Worked example 4

Sam buys 3 pens at £1.20 each and one notebook at £2.15. He pays with a £10 note. How much change does he get?

1. Cost of the pens: 3 × £1.20 = £3.60. (This is repeated addition, just like in Introduction to Multiplication.)
2. Add the notebook: £3.60 + £2.15 = £5.75.
3. Change from £10: £10.00 − £5.75 = £4.25.

Sam gets £4.25 change.

Why we line up the decimal point

It can be tempting to just write numbers side by side, but place value matters. The "5" in £5.00 means five whole pounds, while the "5" in £0.05 means five pence — a hundred times smaller. Lining up the decimal points makes sure each digit stays in its correct column, so pounds only ever add to pounds and pence only ever add to pence. Skip this step and you might turn 5 pence into 5 pounds!

Money facts to remember

In words	Written
Fifty pence	£0.50 or 50p
One pound	£1.00 or 100p
One pound fifty	£1.50 or 150p
Two pounds five pence	£2.05 or 205p

Try it yourself

You have £5.00 to spend at a stall:

• a balloon costs £1.45
• a badge costs £0.80
• a sticker pack costs £2.30

1. Can you buy all three? Add them up.
2. How much change would you get from your £5?
3. What is the most you could buy and still have change left?

(Answers: £1.45 + £0.80 + £2.30 = £4.55, yes you can; change £5.00 − £4.55 = £0.45.)

Great work!

You can now write money correctly, add and subtract amounts, swap between pounds and pence, and work out change. Keep going with Money: Counting Coins and Change to practise recognising coins.