A Flashcards
Unit of account
You exchange money for an equivalent value of goods
Means of exchange
Buy, sell, or exchange
Store of value
It can be stored
Legal tender
National currency of a country an official payment method
personal attitudes
towards risk and reward
Life stages
your financial priorities and needs
Culture
religious belief and ethical principles
Life events
e.g. moving houses or made redundant
Life events
e.g. moving houses or made redundant
External factors
state of economy or availability of jobs
Benefits of planning expenditure
- good credit rating-will be able to borrow money
- not spending money on unnecessary goods, means that you are able to save money
- savings can be used fund purchases and unexpected expenses
Risks of not planning expenditure
- can get into debt
- have insufficient funds
- poor credit rating-can affect your ability to borrow money
- legal action taken against you- can lead to repossession
- not able to save in the future
Debt
Something that is owned or due.
Costs
An amount to pay to buy or use a good or service.
Repossession
To retake possession of something.
Insurance
An agreement providing guarantee of compensation for specified loss of damage.
Bankruptcy
Not having enough money to repay outstanding debts.
Credit rating
Estimate of the ability of a person to fulfil their financial commitments.
Solvent
The ability to meet day by day expenditure.
Inflation
Price of goods is rising and consequently the purchasing power of the currency is falling.
Cash
Used to exchange goods, debt or service.
Adv
- easier to budget your money
- doesn’t get you into debt
Dis
- cash can be easily lost/ stolen
2.may have an emergency but not enough cash to cover cost
Cheques
An order to a bank to pay a stated sum from the drawer’s account.
Adv
- If cheque lost it doesn’t matter as the money won’t be lost.
- Only the named recipient can receive the money.
Adv
- If cheque lost it doesn’t matter as the money won’t be lost.
- Only the named recipient can receive the money.
Dis
- It takes 3 working days to transfer money.
- Not many shops accept them.
- It can easily be tempered with which leads to fraudulent payment transaction.
Debit card
It’s a card that has your own money on it
Adv
- don’t have to carry cash around
- If the card is stolen nobody can use it without the pin.
- keeps your money sate
Dis
- If you forget your pin you will not be able to use the card.
- Risk of the cardholder overspending
Credit card
It’s a card that has your money and you can borrow funds.
Adv
- If you don’t have enough cash in your bank account you can borrow funds.
- You pay back at the end of the month (only the interest rate).
- Most banks offer an interest-free period.
Dis
- If you don’t pay the money back at the end of the month than you can get yourself into debt.
- There is an interest rate.
- They will charge you money if you make a late payment.
Direct debit
An arrangement made with a bank allowing a third party to withdraw money from a person’s account on agreed dates, usually used to pay bills.
Adv
- stick to a routine so you can predict and plan
- budgeting every month is easier
- you have more control
keeps a record in bank statement
Dis
- make sure that there is enough funds in your bank account
- You are giving control of payments to the third party, but any mistakes on their part could have negative effects on your account because if you don’t let the bank, then the payments will
regularly go out of your account therefore losing money
Standing order
Instruction to the bank to make regular fixed payments to a person or particular person.
Adv
- bills can be paid automatically
- you can tell the bank how much you want to pay
- you can cancel the standing order whenever you want
Dis
- make sure there is enough funds
- might be charged money if not enough fund
- you will need to remember when the fund will be coming in
