Finance - Unit 3 Multiple Choice Retake. Flashcards
What is personal sustainable finance?
Achieving and maintaining a balance between personal income and expenditure over the short, medium and long term, so an individual can satisfy their needs and achieve as many of their wants and aspirations within their budget.
How did the financial crisis start?
banks gave out loans, mortgages, hire purchases (Borrowing options) to people who couldn’t pay them back
What was the personal debt in the UK?
Total personal debt in the UK, doubled between 1994-2002 from £400bn to £800bn and hit a peak of £1400bn in 2008
The recession that followed the financial crisis caused unemployment figures to rise, which hit a peak of what?
Unemployment figures hit a peak of 2.7 million people on November 2011
What were the consequences of people getting deeper and deeper into debt
- People were made Bankrupt
- Some people would face county court judgements
- Some individuals had their houses repossessed
- It would give you a bad credit rating
Growing levels of personal debt and rising unemployment resulted in?
Government agencies such as pay plan and the money advice service would be in high demand as people wanted support with their financial difficulty.
What has the government done to reduce people from going in debt or having financial difficulties?
The Government added financial capability to the schools curriculum so students can have a basic understanding of financial literacy
Achieving financial sustainability requires you to do what? (6 things)
- Be aware of what you’re spending your money on
- Have an adequate emergency plan for unexpected circumstances or in other words make a contingency plan
- Only borrow if you are certain you can pay back
- Look for ways to increase income
- Regularly monitor and review financial plans, cash flow forecasts as well as budgets
- Use budgets and cash flow forecasts to plan spending
What is the government annual budget?
The government annual budget is a forecast/estimate of the taxation it expects to receive in the coming year and what they plan to spend it on in.
Why do businesses make annual budgets?
Businesses write up annual budgets to predict income from sales and investors etc and then see if they have enough to cover expenditure. They then use that information to predict whether they will make a profit or loss.
Why do individuals draw up budgets, cash flow forecasts and financial plans for the short, medium and long term?
Individuals do this, as it allows them to see what needs and wants they want over a time period and how much these will cost. They can then see if their income is enough to cover expenditure, and if they have a surplus (leftover money) they can plan what to do with it, however if they fall into a deficit then they can look for ways to increase income as well as reducing unneeded costs.
What is Financial Planning?
Planning for future expenditure and deciding how it will be financed
Why do people use monthly current account statements?
People use monthly current account statements to see what direct debits, standing orders and other regular payments are taken from their account each month
How can people maintain health sustainable finances?
Individuals can do this by planning how to finance regular essential and mandatory bills, such as road tax, council tax, rent, gas and electricity etc
What are some examples of long term financial planning?
- Retirement
- Raising a family
- Holidays
