financial literacy and budgeting

Question 1

what is credit?

Answer 1

using money belonging to a lender to buy something new, with the understanding that the lender will be repaid in the future

Question 2

what is the advantage of paying more than the minimum on a credit card?

Answer 2

you avoid paying interest

Question 3

what are credit cards?

Answer 3

issued by a financial institution, usually for an annual fee. it enables a consumer to spend up to a predetermined level . card holders receive a monthly statement and can pay back the debt in full or part time which incurs interest.

Question 4

types of credit options

Answer 4

store card- myer david jones
personal loan- given by financial institution
credit card-given by financial institution

Question 5

things to consider when getting a card

Answer 5

• read the contract
• know the interest rates
• don’t pay only the minimum balance- try topay all of the money owed by the due date as this will stop you from incurring interest
• have a low credit card limit
• only buy what you can avoid and pay back
• avoid impulse buying- you still have to pay it back one day

Question 6

what is a credit file/record

Answer 6

a record of of an individuals credit history, lists when someone was unable to pay debt

Question 7

what happens if you have bad credit?

Answer 7

might not be able to qualify for a credit or home loan

Question 8

what is superannuation

Answer 8

money put away over your working life for retirement, this becomes your stream of income during retirement, compulsory in Australia, currently 11%

Question 9

buy now, pay later

Answer 9

• an online payment method that allows you to pay for your online purchases after receiving them
  -standard payment period of 4 equal fortnightly installments

Question 10

pros and cons of buy now pay later

Answer 10

pros- immediate use, not just online, good alternative to a credit card
cons- can encourage impulse spending, late payment fees

Question 11

consumer rights when purchasing goods and services

Answer 11

a consumer is entitled to have goods repaired, replaced or money refunded if there is a major problem with the goods or services

Question 12

identity theft

Answer 12

a specific type of fraud which involves stealing money or gaining other benefits by pretending that you are someone else

Question 13

scams

Answer 13

traps to dishonestly take a persons money, target your emotions

Question 14

what are type of scams

Answer 14

charity, psychic and clairvoyant, computer malfunction and romance

Question 15

how to avoid being scammed

Answer 15

be cautious, sus, patient, alert and wise

Question 16

what is a budget?

Answer 16

a financial plan that shows expected future receipts and expected future payments over a given period of time.

Question 17

the purpose of a budget is to help you:

Answer 17

• manage your money so that you can purchase goods and services without getting into financial difficulties
• manage your spending so that you have cash available to make a desired purchase eg a car
  -reflect on your spending habits and find areas where you might be spending too much

Question 18

cash budget structure

Answer 18

• Tiffany’s Cash Budget for July – September 2022
• Expected Receipts
• Total receipts
• Less Expected Payments
• Total Payments

Excess of Receipts over Payments
Bank Balance at Beginning of Month
Estimated Bank Balance at end of Month

Question 19

ways to increase your cash

Answer 19

earn more income, cut back on payments