A Part 2 Main Part Flashcards
What is money? *(function of money)
A method of exchange, typically in the form of any combination of coins and banknotes.
How does managing money enable a business to be successful?
Doing This allows the business to make a profit and not get into debt.
What Is Inflation?
General increase in prices and fall in the purchasing Inflation leads to a decline in the value of Money.
What Is A Unit Of Account?
this means a value can be given to goods and services
What Is Means Of Exchange?
allows people to buy and sell goods (to trade with each other)
What Is Store Of Value?
it can be saved and spent in the future
What Is Legal Tender?
it is a recognised form of payment accepted for goods or services
What Is Personal Attitudes?
to risk and reward, saving or spending, borrowing (credit and debt)
What Are Life Stages?
childhood to adulthood, changing financial needs and attitudes
What Is Culture In Regards To The Role Of Money?
religion, tradition, ethnic background affects saving and borrowing
What Culture Do Not Think Money Is For Saving?
Islamic, they think money is only a means of exchange and do not save it, or like to earn interest on it
What Are Life Events?
university costs, marriage, property, illness, financial losses
What Are External Influences?
economic change, jobs wages, taxes, benefits affect spending and saving
What Are Interest Rates?
Low rates encourage borrowing and spending, high rates encourage saving.
What Are The Financial Needs For A Child Name As Many?
Few Financial Needs:high reliance on parents for day to day expenditure and clothes and toys.
Complications Of Needs For A Child Name As Many?
Parents Pay - Family Gifts, maybe open a savings account for the child, so the child can then use the money at a later stage of their life
Adolescence Financial Needs Name As Many?
Medium Financial Needs:College Fees, University Fees, Car Insurance, Transport Fees, Food Fees, Car Financial Needs, Technology, Driving Lessons, Direct Debit Phone Bill, Credit Card/Debit Card
Adolescence Implications
Uni Fees can be really expensive, student Loan means that the student would have to work hard to keep out of debt, Interest Rate for the student loan goes up, then you have to pay more monthly instalments which could be hard to meet for a student
Young Adult Financial Needs?
Rent/ House Mortgage, Going Out Fees, the personality of the person after graduating, this means that they might be incentive to spend and not save
The financial needs of an Adult Name 1
- They need to supply for their family needs and put a mortgage on a house/property
Name The External Factors That Affect Money
Economic cycle – taxation, consumer confidence, unemployment, government and elections, bank of England & interest rates.
Name 11 Principles To Consider When Planning Expenditure (Only learn a few)
Avoid getting into debt – interest payments add to the amount borrowed
Control costs – limit spending on unnecessary items, set a budget
Avoid legal action, repossession of your goods or valuables
Remain solvent – be able to pay for day to day costs and repay debts
Keep a good credit rating – be able to borrow Money in future (credit scores affect availability of credit and cost of it)
Avoid bankruptcy – a situation when debts cannot be repaid – (more in B4)
Manage Money to fund purchases – be able to buy for cash rather than borrowing
Generate income and savings – to provide a safety net against illness or job loss
Set financial targets and goals – to purchase a car or house
Provide insurance against loss or illness – insure your valuables, holidays, etc
Counteract the effects of inflation – buy items before their prices rise.
Name As Many Ways To Pay For Goods and Services?
Cash, Debit Card, Credit Card, Standing Order, Direct Debit, Store Card, Contactless Card
CashWhat Is It? Advantage? Disadvantage?
notes and coins in a wide range of denominationsWidely accepted
people trust cash, easy to control spending (budgeting)
Can be lost or stolen, counterfeit (fake), cannot use online or for very large purchases
Debit Card What Is It? Advantage? Disadvantage?
card issued by your bank, money spent on goods is deducted from your current account
Secure, widely accepted, no need to carry cash, use for online purchases, can withdraw cash at cashpoint
not for small purchases, deducted quickly, you may overspend
Credit Card What Is It? Advantage? Disadvantage?
issued by financial institutions, allows customers to delay paymentone month’s interest-free credit (buy now, pay later)
widely accepted, use online or in-store, some protection against fraud
interest is charged after 1 month, easy to get into debt, credit limit, charges for cash withdrawals
Cheque What Is It? Advantage? Disadvantage?
A paper transaction giving a bank permission to transfer payment from your account to another person’s bank account.less risk than cash, useful for postal transactions, written for exact amount (no need to give change)expensive if it the bank refuses it (bounces), old fashioned, it takes a few days for the money to go out of your account, you could overspend, errors writing cheque
Electronic Transfer What Is It? Advantage? Disadvantage?
payment is transferred directly from one bank account to another bank account
record of payment, instant payment, can be done remotely e.g. by mobile app
Need to be carefully set up to ensure the transfer goes to the right place, not suitable for face to face
Direct Debit What Is It? Advantage? Disadvantage?
permission given to the bank to make regular payments to a third party upon request (eg. to pay your electric bill monthly)
ensures regular payments are not missed, can change the amount (variable), easy to set up
amount taken can vary making budgeting difficult, taken automatically (amount taken may be wrong), needs to be set-up again if changing your bank
Standing Order What Is It? Advantage? Disadvantages?
a fixed amount of money is taken out of your bank account on a specified date (normally monthly)
easier to plan and budget for it, ensures regular payments are not missed
it could make you overdrawn, it does not stop until you cancel it.
Pre Paid Cards What Is It? Advantage?Disadvantage?
you upload money to the card and spending reduces the balance
can set spending limit, can top-up, loss is limited if stolen, use onlineinitial fee.
can be difficult to monitor balance, can be used by others without permission
Contactless Card What Is It? Advantage? Disadvantage?
payment made by swiping a contactless terminal
convenient, quick and easy
only for small purchases (less than £30), possible fraud
Charge Cards What Is It? Advantage?Disadvantage?
issued by financial institutions, buy now pay later short term interest free period.
less risk of building up debts, less need to carry cash.
you must pay the balance in full each month, annual fixed fees, you need a certain level of income (wages)
Charge Card What Is It? Advantage? Disadvantage
issued by a retail outlet (eg. Topshop) buy now, pay latercustomers can delay paying for goods.
extras such as personal discounts or offers usually included, interest-free period.
interest rate is very high after the free period, can only be used in that specific shop, easy to overspend and get into serious debt
Mobile Banking What Is It? Advantage?Disadvantage?
use a tablet or smartphone to manage your bank accounts
convenient and secure, make payments and transfer amounts between your accounts.
not as useful as internet banking, need to install an app, screen size and speed of device may affect the service.
Banker’s Automated Clearing Services (BACS) What Is It Advantage? Disadvantage?
Payments transferred from one account to another
(eg. Salary from your employer’s bank account to your bank account)
BACS takes 3 days, FPS takes 2 hours, secure, usually no feea limit on the max amount, FPS not offered by all banks
Clearing House Automated Payment Systems (CHAPS) What Is It? Advantage? Disadvantage?
Electronic bank-to-bank technology that enables payments to be madeunlimited amount.
faster than BACS (same day if done before 2pm)
fixed charge per transaction, payments in Sterling £ only. They are unconditional, and once made, cannot be recalled
What is Travel Insurance
protection against losses on holiday
Life Assurance?
life cover and investment savings combined
Life Insurance?
Life cover pays out on death of the person
House Insurance?
Covers the building of the house
Contents Insurance?
Covers Valuables and the goods inside the house
Third Party Car Insurance?
most basic cover Covers you incase you injure someone else
Third party fire and theft car insurance?
Covers you for everything that could happen
