financial Flashcards
what is a need
a need is something necessary to live and function eg; home and food
what is want
is something that can improve your quality of life
eg; branded bags and clothes
what is savings
set aside income so it can be available in the future or in case of emergency
types of saving accounts
basic bank accounts, online savings, higher interest accounts, child or student saving accounts
sources of household income
wages;salary , government payments and allowances, investment income, gifts
importance of preparing a budget
it gives you a informed decisions that helps you know how much to spent
what is budgeting
a strategy to ensure your not spending more then you have to and to ensure your achieve your saving goals
types of investments
term deposit, superannuation, property, shares, risk versus return, ethical and social considerations
whats term deposits
saving account offering a higher lever of interest, but with a requirement to leave the money for a specified amount of time
superannuation
an investment that everyone makes as they enter the workforce
property
it’s a big investment because you can invest surplus cash and or rent it out and it will provide additional rental income
shares
a part ownership in a company where profits made by the business are paid to shareholders as dividends.
calculate simple interest
Calculate the deposited amount (principal), by multiplying the interest rate, and then multiply by length of time (number of years)
eg $1000 x 10% x 2= $200
calculate compound interest
Calculate the amount invested (principal amount), by multiplying the interest rate.
eg; $1000 x 10%= $100