A.1 Functions of Money Flashcards
What is the role of money affected by? (6 reasons)
- Culture
- External influences
- Interest rates
- Life stages
- Personal attitudes
- Life events
What are benefits of planning expenditure? (4 reasons)
- Avoid getting into debt
- Maintain a good credit rating
- Manage money to buy items
- Provide insurance against loss or illness
How do external influences impact the role of money on individuals? (5 reasons)
- Unemployment
- GDP
- Inflation rates
- Wage rises
- Interest rates
What are the functions of money? (3 functions)
- Means of exchange
- Store value
- Legal tender
What is the GDP?
Gross Domestic Product - measures the size of the countries economy.
What are the five different life stages?
- Child
- Teenager
- Young adult
- Middle aged adult
- Old age
What does a child need money for? How do they get it? (4 points)
- May rely on parents
- May rely on pocket money
- Encouraged to save by parents
- May want to buy sweets or toys
What does a teenager need money for? How do they get it? (5 points)
- Want to be more independent
- Slightly less reliant on parents as want to socialise away from family
- May look for part time job
- Still partially reliant on pocket money
- More likely to receive cash as gifts
What does a young adult need money for? How do they get it? (6 points)
- Joining university or starting a career
- Looking to be more independent
- Buying a car and buying/renting accommodation
- Looking to settle down (maybe marriage and family)
- Loans/mortgage
- Eligible for credit/debit cards
What does a middle aged adult need money for? How do they get it? (8 points)
- Supporting family
- Saving for children’s future
- Improving own lifestyle (moving)
- Enjoying access to additional money to spend on luxuries like holidays
- Savings accounts
- Paying a mortgage
- Planning for own future (pensions)
- Income peaks but matched with high expenditure
What does an elderly need money for? How do they get it? (5 points)
- Fewer dependents
- May downsize (move from home to retirement home)
- Fewer financial needs for assets but may be higher for services such as healthcare
- Mortgage payments stop or become lower
- Less income (reliant on pension)
What does buying on credit mean?
To purchase, on a promise, in fact or in law, to make a payment at a future day.
How would you manage life events that you can control financially e.g. weddings? (4 ways)
- Set a budget
- Consider how much I am earning and how much I want to spend
- How long I will need to save the money
- Where I could save the money to receive the maximum amount of interest
How would you manage life events that you can not control financially e.g. illness? (3 ways)
- Having adequate insurance cover
- Saving income to provide a safety net
- Depends on personal circumstances (married, live alone, children)
