Functions and Role of Money Flashcards
Unit of Account
Allows a monetary value to be placed on goods & services
Means of Exchange
Enables businesses to trade with other businesses and customers
Store of Value
Allows businesses and customers to use it in the future as it keeps value
Legal Tender
Method of payment - allows us to pay later
Personal Attitudes
Depends on family’s attitudes or your own attitudes.
Life Stages
Childhood, adolescence, young adult, middle age & old age
Culture
Different cultures, affected by tradition, religion and ethical beliefs, will have different attitudes to money.
Life Events
- Within your control, for example going to university, travelling abroad, getting married or starting a family.
- Outside your control, for example illness, financial gains or losses.
External Influences
Factors outside your control, including the state of the economy, will have an impact
Interest Rates
The cost of borrowing money or the reward for saving money
How does interest rates impact the role of money?
Low interest rates - may be more willing to borrow money or spend on Credit
High Interest Rates - there is more of an incentive to save.
Which life stage does this refer to?
Financial Needs/Implications?
- Limited needs
- Mainly reliant on parents
- May want to buy sweets or toys
Childhood - Financial Needs
Which life stage does this refer to?
Financial Needs/Implications?
- Money received from presents may be spent as attitude will be that this is to buy things you want
- May be encouraged to save or parents or grandparents may set up a savings account for you into which they make regular payments
- May rely on pocket money
Childhood - Implications
Which life stage does this refer to?
Financial Needs/Implications?
• Want to be more independent
• Slightly less reliant on parents as want to
socialise away from family
Adolescence - Financial Needs
Which life stage does this refer to?
Financial Needs/Implications?
- May look for a part-time job
- Still partially reliant on pocket money
- More likely to receive cash as gifts and may be willing to save up smaller amounts in order to make bigger purchases
Adolescence - Implications
Which life stage does this refer to?
Financial Needs/Implications?
• University or starting a career • Looking to be more independent • Buying a car and buying or renting a flat or house • Looking to settle down and maybe get married or start a family
Young adult - Financial Needs
Which life stage does this refer to?
Financial Needs/Implications?
• May take a student loan if going to university
• Borrow money to pay for a car or purchase one on a
finance deal
• May be looking at taking out a mortgage
• Need to earn money to support self and others
• Eligible for credit and debit cards
Young adult - Implications
Which life stage does this refer to?
Financial Needs/Implications?
• Support family
• Start saving for children’s futures, e.g.
university, weddings, etc.
• Look to improve own lifestyle, e.g. new car or
move house
• Enjoy having access to additional money to
spend on luxuries such as foreign holidays
Middle age - Financial Needs
Which life stage does this refer to?
Financial Needs/Implications?
• Savings accounts for specific purposes
• Paying a mortgage
• Planning for own future through pensions and retirement plans
• Likely to be the stage of life when income peaks but
matched with high expenditure
Middle age - Implications
Which life stage does this refer to?
Financial Needs/Implications?
• Fewer dependents
• May downsize, e.g. move from family home
to a smaller retirement home
• Fewer financial needs for assets but may be
higher for services such as health care
Old age - Financial Needs
Which life stage does this refer to?
Financial Needs/Implications?
- Mortgage payments stop or become lower
- Less income as reliant on a pension rather than a salary
Old age - Implications
State two IMPLICATIONS of a YOUNG ADULT
Either two from:
• May take a student loan if going to university
• Borrow money to pay for a car or purchase one on a
finance deal
• May be looking at taking out a mortgage
• Need to earn money to support self and others
• Eligible for credit and debit cards
State two FINANCIAL NEEDS of MIDDLE AGE
Either two from:
• Support family
• Start saving for children’s futures, e.g.
university, weddings, etc.
• Look to improve own lifestyle, e.g. new car or
move house
• Enjoy having access to additional money to
spend on luxuries such as foreign holidays
What is Debt?
Money owed
What is a Credit rating?
A score given to individuals on how likely they are to repay debts based upon their previous actions.
What does the term Bankrupt mean?
When an individual or organisation legally states its inability to repay debts.
What does the term Solvent mean?
The ability to meet day-to-day expenditure and
repay debts.
