Commerce - Financial Literacy Flashcards
Saving
Setting aside money to spend later
Investing
Putting money into shares, property or other financial schemes in the hope of making profit
Debt
Sum of money that is owed
Interest
The amount of money a person has to pay the lender in addition to the original amount borrowed
Interest rate
The amount a borrower must pay to a lender for the use of assets such as money - usually expressed as a percentage of the total amounted borrowed
Principle
Money that was originally invested or loaned
Deposit
Sum of money paid into an account, which contributes to the full purchase price
Shares
Units of ownership in a publicly listen company
Investment Risk
The likelihood of losing money in a financial scheme
Share market
A market in which shares in publicly listed companies and bought and sold
Australian securities exchange (ASX)
operates Australia’s primary securities exchange; shares are one form of security that an be traded via ASX
Scams
A scheme that is deliberately dishonest
\Why do people save?
- To earn more
- To spend less
How do you set saving goals?
- Identify saving goal
- Determine weekly goal
- Identify time frame
Simple Interest
Multiplying principle by interest rate by time
eg.
principal - $1000
interest rate - 10% per annum
time - 2 years
1000 x 10% x 2 = $1200
Compound interest
Interest added to principal, then new amount is used to calculate the new interest
Good debt
Money borrowed that is used to make more money
Bad debt
Money borrowed that is used and value decreases
Fixed expenses
An expense that doesn’t change from period to period
eg. Rent, Gas, Electricity
Debt expenses
Money that you owe and have to repay back
eg. loan repayments, credit car payments
Unpredictable expenses
Expenses that are random and generally have no foreseeable reason
eg. pet costs, car repairs
Types of Scams
Scams that target emotions:
- Charity
- Psychic and clairvoyant
Investment and online account scams:
- Phishing emails
- Phone calls
COVID-19 :
- Online shopping
- Phishing
- Superannuation
Impersonation
How to avoid scams
- Don’t click hyperlinks in text/social media messages or emails
- Never respond to a text, email or phone request for you personal or financial details, just press delete or hand up and block the number
- Never give remote access to your computer to a stranger
- Use an independent source to verify the legitimacy of the contact
