1.1 The importance of sustainable personal finances flashcards preview
High levels of personal debt in the UK may be manageable as long as:
- economy is growing
- unemployment is relatively low
Sustainable personal finance definition
Achieving and maintaining a balance between personal income and expenditure to satisfy needs, wants and aspirations within a budge
Impacts of not being personally financially sustainable
- impacts for future financial and economic health of country
- unemployment
- personal debt
- house repossessions
What did growing levels of personal debt and rising unemployment result in?
The formation of government agencies, such as the money advice service, and non-government organisations such as citizens advice
Individuals that want to achieve sustainable personal finances over long term should aim to
- be aware of how much they are spending
- use weekly/monthly budgets and cash flow forecasts
- have an adequate emergency fund
Who is to blame for the financial crisis?
Bankers who are accused of encouraging people to take on mortgage loans and other debts that they could not afford to repay
Why should consumers take the blame for the financial crisis?
They took advantage of accessible loans to pay for unsustainable levels of spending
Why has financial capability been added to the national curriculum?
so that all pupils should leave school with at least a basic level of financial literacy
Insolvency
A situation in which a person cannot repay what they owe because their debts are greater than their assets
Recession
A period of at least six months when the amount of goods and services that the country is producing shrinks
