A 1-4 Flashcards
What are the functions of money?
Unit of account
Means of exchange
Store of value
Legal Tender
How can someone influence or affect money?
Someone's attitude towards risk and reward People being at different life stages Religion External influences interest rate changes
Why should you plan your finance?
Don't get into debt Trying to save money Avoiding legal repossession Maintaining a good credit score Inflation
What does Unit of account mean?
This mean a value can be given to goods and services (Price and cost of items can be measured)
What does means of exchange mean?
This allows people to buy and sell good (Able to trade with each other)
What does store of value?
It can be saved and spent in the future ( £5 will always be £5)
what does legal tender mean?
It is a recognized form of payment accepted for good or services
How does Personal attitudes effect the attitude towards money?
- Having a high risk high reward attitude
- Spending rather than saving
- Borrowing rather than saving
- Saving rather than spending
- Low risk purchases
How does Life stages effect the attitude towards money?
Childhood - Doesn’t have to buy anything. Everything is paid for. May get pocket money for sweets
Adolescent - May want some extra clothes or food. May have a part time job. Not paying for anything important but has money to go out with friends.
Young adult - Moving out, paying rent, finishing Uni. Needs to be responsible with what they buy.
Middle age - Buying a house, having children, getting married. Needs to be responsible as providing for a family.
Old age - Pension every month needs to be spent wisely. Buying food and cloths.
What are principles to consider in planning person finance?
Avoid getting into debt Control cost Avoid legal action Remain solvent Keep a good credit rating Avoid bankruptcy Managing money to fund purchases Generate income and savings Set financial targets and goals Provide insurance against loss or illness Counteract he effects of inflation
Advantages and disadvantages of cash
Cash - notes and coins in a wide range of denomination
Adv - Widely accepted, people trust cash, easy to control spending
Dis - Can be lost of stolen, counterfeit, cannot use online or for large purchases.
Advantages and disadvantages of debit card
Debit card - card issued by your ban, money spent on a debit card is deducted from your account.
Adv - Secure, widely accepted, no need to carry cash
Dis - Not for small purchases, deducted quickly, can overspend
Advantages and disadvantages of credit cards
Credit cards - Issued by financial institutions, allows customers to delay payment.
Adv - One month’s interest free, widely accepted, can use online or in stores.
Dis - Interest is charged after 1 month, easy to get into debt, credit limit.
Advantages and disadvantages of Cheque
Cheque - A paper transaction giving a bank permission to transfer payment.
Adv - less risk than cash, useful for postal transactions.
Dis - Expensive if the banks refuse, Old fashioned, takes a few days fir money to go out of your account.
Advantages and disadvantages of Electronic transfer
Electronic transfer - Payment is transferred directly from one bank account to another
Adv- Record of payment, instant payment, can be done remotely
Dis - Need to be carefully set up to ensure the transactions goes to the right place, not suitable for face to face.
