Chapte 5 - Personal Saving And Borrowing Flashcards
What is financial independence?
Knowing you have money saved for when you need it.
Gives you FREEDOM + CHOICES.
Eg …….taking a holiday whenever you want
Starting your own business
Helping family /friends when they need it
Taking a job with less pay
Savings
Saving means holding on to and not spending your money.
Saving should be done on a regular basis
Reasons for saving
- To buy something in the future (eg) new laptop
- To earn additional through interest on savings
- to have a deposit to buy a house
- For a future event, like a world trip or a ski holiday.
- For unforeseen events such as emergencies
Factors to consider hen saving
SAFTEY: is your money safe? Most ppl save with a facial institution bank, building society ,An Apost or a credit union
INCOME: how much interest (income ) will I earn ?
TAXATION: How much DIRT will I pay ?
CONVENIENCE: Can I withdraw my money whenever I want?
INTERNET ACCESS: Are my savings easy to access online or offline ?
Interest on savings
When starting the rate of interest, most financial institutions give the CAR ( Compound Annual Rate ).
This means that the interest on your savings is added each year to the principal ( the amount of money you saved ).
Investments
Investing means putting your money/savings into a product or scheme that should make a profit.
There are many types of investment available to from socks to shares to bonds or even buying property.
Having stares in a company means that you will have a share of the profits that a company makes
They offer the opportunity but also risk = lose money
Pensions
Pensions are long term loans that helps you save for the future.
When you are working you pay into a fund to provide for your retirement .
The state offers a pension of 230 euro a week but however if you plan on travelling and enjoying your retirement you will need additional money. To get that you will need to pay into a pension plan.
Pension planning
The younger you start paying into a pension fund the cheaper it is.
** the important message is if you do not start paying into a pension at a young age you will pay a much higher price when you’re older.
Borrowing
Borrowing means receiving money ( a loan ) from a financial institution that you must pay back with interest.
THERE WILL BE OTHER CONDITIONS:
You must be 18 or over.
You must be credit-worthy and have a good track record of paying back other loans and of being a regular saver.
You must have regular income.
You may have to offer some form of collateral - property or other assets,which the lender can take if you fail to repay the loan.
Reasons for borrowing
Reasons:
COLLEGE FEES= Education is an investment in your future and you may not be able to pay college fees in advance.However,your qualifications will help you get a good job and pay back the loan.
Major purchases eg,house = a house may take a lifetime to save for and you do need somewhere to live.
However it makes more sense to be paying back a mortgage to live in your house rather tan paying rent.
Types of borrowing
Debit cards Credit cards Overdrafts Loans Mortgages
Debit cards
A debit card is a payment card that deducts money directly from a consumer’s checking account when it is used.
Credit cards
A card issued by a financial institution that allows you to buy goods on credit.
When you use a credit card you will billed for the money spent at the end of the credit period ( usually one month ).
If you do not pay the bill on time, you will be charged interest %%%%.
Student credit cards
Student credit cards are specifically designed to suit people living on a tight budget.
They offer a lower credit limit perhaps €400 to students in their first or second year of full-time study and an increase rate of up to €850for those in third year or above.
Affinity cards
Affinity cards are the same as credit cards but in addition the bank make a donation to an agreed organisation often a college are charity.
