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grade 11 consumers > Household; Budget; Banking and methods; Techn. for payments > Flashcards

Household; Budget; Banking and methods; Techn. for payments Flashcards

1
Q

Explain Stats SA fully

A
  • SA national statistics agency
  • Carry out surveys every 5 years to gather stats about income and spending patterns of people living in SA
  • Data = used to update consumer price index
    -CPI = list of prods and services people in SA mostly buy
  • Draws comparisons between the income and expenditure of different races; ages; income groups; sexes etc
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2
Q

Explain non-financial income fully

A
  • Products and services that a household obtains by exchanging something other than money
    eg : - Doing your own work; growing own vegetables; using services the government provides ( libraries; clinics); free meals and accomodation
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3
Q

Explain financial income fully

A
  • Products and services that a person or household receives within a specific period of time
  • Income from labour ( wages; salaries; salesman; labour)
  • Income from produce ( farming income / profit)
    -Income from investment ( interest; dividends; rentals)
  • Retirement income ( pensions; annuities)
  • Fringe benefits ( taxable / non-taxable)
  • Casual income ( gifts; inheritance)
  • Social security ( child support; disability grants; old age; foster child)
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4
Q

What is expenditure
What is expenditure patterns

A
  • The total money spent on goods and services
  • The typical ways in which consumers spend their money on goods and services
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5
Q

Name the factors affecting expenditure patterns

A
  • Socio - economic position
  • Type of household and stage in life cycle
  • Age
    Cultural / population group
  • Residential group
  • Inflation
  • Interest rates
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6
Q

Explain each factor affecting expenditure patterns fully

A

Socio Economic:
- Low income grps focus mainly on buying basic necessities
- Middle income groups spend on basic needs; children’s future and education are top priorities followed by lifestyle goods
- Middle to high income groups spend more on luxury goods and services
- Highest income groups spend even more on ultra - luxury goods and services

Type of household and stage:
- Families with school going children = large part of income on school fees; sports equipment; coaching and transport
- Families with grown up children ( left the home) = spend more on personal interests and hobbies and travelling
- Students in a household spend more on social activities and entertainment

Age:
- 20-24 = more on electronic and home appliances and movies
- 45-48 = more on vacations
- Peer group pressure within age groups and the way media targets different age groups also affects spending

Cultural:
- Religious and cultural practices affects services and products people buy and consume

Residential area:
- Needless money to lie in a cheaper area than you need to live in a more expensive area
- More expensive are = higher property tax; home insurance; maintainence costs

Inflation:
- Rise = less spent on luxury items; eating out; holidays

Interest rates:
- Rises = cost of credit increases and monthly payments ( home loan) incr considerably

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7
Q

What is a budget

A

A detailed breakdown of all your income and planned expenses for a specific period of time

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8
Q

Why should you budget

A
  • See exactly how much money you have available
  • Track your spending
  • Stay in control of your money
  • Pay off your debt and live within your means
  • Reach financial goals through saving
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9
Q

How can you improve your satisfaction you get from what you spend

A
  • Assessing needs and wants
  • Setting realistic goals and objectives
  • Preparing for the unexpected
  • Making your money work for you
  • Spending less than you earn
  • Controlling and recording spending
  • Making your money work for you
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10
Q

Explain each way to get satisfaction on what you spend fully

A

1) - Determine what your needs and wants are

2) - Something you want to achieve and are willing to work for
- Need to be SMART
Specific; measurable; Attainable; Realistic; Time bound
3) Set money aside for the unexpected events ( eg car repairs) in an emergency fund

4) Find investments with the highest interest rates and the lowest fees

5) Live within your means ie spending less than you earn to avoid excess
debt and save money

6) - File all documents relating to your income and expenditure
- Keep ; purchase slips with guarantees; receipts; monthly bank statements; proof of interest received; proof of credit card purchases

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11
Q

What are the steps to budgeting

A

1) List anticipated income
2) Estimate expenses
3) Calculate difference between income and expenses and determine savings
4) Evaluate your budget

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12
Q

Explain each step of the budgeting process fully

A

1) - Incl all sources of income in your budget
- Calculate the net income by adding up all the after all deductions are made from gross income

2) List and prioritise your expenses
- Fixed = specific regular amounts that usually involve a contract or agreement ( rent; home loan; furniture payments)
- Variable = change often due to price changes or different circumstances ( entertainment; groceries; medicines and transport)
- Non-essential = optional expenses that you choose to spend / not on
- Emergency = things that come up unexpectedly but have to be paid for

3) Expenses < income = net profit
Expenses > income = net loss

4) Record ( track); Reduce ( trim); Budget ( target)

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13
Q

What is bank

A
  • Private financial institution that offers services to the public eg. home loan; cheque accounts and credit cards
  • They act between people who want to save their money and people who want to spend their money
  • Make money by charging interest on the loans they grant to clients
    - Banks pay interest to clients that invest in them
  • Charge for service fees eg cash deposits
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14
Q

What are the types of bank accounts

A

Savings
Money markets
Fixed deposit
Current
Call

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15
Q

Explain savings account fully

A
  • Safe short term investments
  • Can deposit and withdraw at any time
  • Low interested earned
    - Can take money out at any time = bank cant lend your money put to other people for longer periods
  • Bank charges = low
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16
Q

Explain money market fully

A
  • Higher interest rate than savings
  • Interest rate changes as the country’s general interest rate does
  • Need a large min balace
  • Service fees on deposits but not on withdrawals
17
Q

Explain fixed deposit fully

A
  • Deposit money into account for a fixed period at a fixed rate or set interest rate
  • Good way to save your money
  • Fixed for at least a year
  • Higher interest than savings acc
18
Q

Explain current accounts fully

A
  • AKA Cheque account
  • Keep money in account and write a cheque when you want to pay someone
  • No interest earned
  • Upon opening account you receive a cheque book
    - Might also get a debit card to withdraw cash or make payments in shops
  • Can apply for an overdraft ( limit = determined by bank & interest charged)
  • Make annual or monthly payments
  • Get a monthly statement showing movement of funds in and out of account and cheques written
19
Q

Explain a call account fully- Can make deposits and withdrawals as you need to

A
  • Can make deposits and withdrawals as you need to
  • Need a minimum balance at all times
  • No fixed investment period
  • Easy access to funds
  • Competitive interest rates
  • Can transfer interest to other accounts
  • Account can be used for security applications for credit
20
Q

How can you keep your bank charges down

A
  • Keep transactions to a minimum ( fees charged per transaction)
  • Use ATMs; EFTPOS; cellphone banking or internet banking where possible
  • Use your own banks ATMs
  • Combine your accounts into 1 account or link accounts together
  • Ask your bank about the cheapest transaction costs
  • Plan your withdrawals carefully
21
Q

Explain cash transactions fully with advantages and disadvantages

A
  • Involve direct exchange of money for goods
  • Payments are made using notes or coins butu also cheques; debit cards; postal orders
  • Paying with cash = entitled to ask for a cash discount
  • Receipt = guarantee for larger purchases

Advantages:
- Free to shop where ever and not only shops that offer credit
- May bargain and ask for a cash discount
- Can save credit for emergencies
- You think twice before making a purchase because you feel the impact of cash purchases immediately
- Need less admin

Disadvantages:
- Most stores do no deliver
- Some shops are unwilling to refund cash for returns
- Carrying large amounts of cash can be unsafe
- Need to be disciplined about keeping track of all your expenses
- May receive preference at a shop where you have an account

22
Q

What are the types of cash transactions

A

Cheques
Postal order
Cash with order
Cash on delivery
Debit cards

23
Q

Explain cheques fully

A
  • A piece of paper that orders a payment
  • Person writing = drawer and has a current account; write transaction details ( date; payee and signs)
  • Many dealers dont accept cheques due to high risk of fraud
  • Every cheque has a counterfoil that contains the serial number and details of the cheque
    - Info can be used to compare with bank statements
  • Crossing a cheque = ensure funds are directly deposited into the account of the payee
24
Q

Explain lay by fully

A
  • Shop sets items aside for you until you’ve paid for them in full
  • Sign a written credit agreement and pay deposits
  • Get items once paid fully

Disadvantages:
- Goods remain at shop until paid for fully
- Clothing may not fit when you receive them / not in season anymore
- Forget about purchases = lose deposits and payments already
- Cost of items = higher

Advantages:
- Cheaper than other credit options
- Get items by depositing small amounts until its paid off fully

25
Q

Explain hire purchase fully

A
  • Allows you to pay a deposit then to pay the balance of the purchase in smaller amounts called installments over a set period
  • Get goods immediately but dont own them till paid for in full
  • Installment sales = for more expensive items

Disadvantage:
- Dont own goods till paid for in full
- More expensive than cash purchases
- If you cant make payments you may lose the goods and the payments already made

Advantages:
- Get to use goods while you pay for them
- Can replace essential and expensive things immediately

26
Q

Explain credit transactions fully with advantages and disadvantages

A
  • Method of obtaining goods and services in the present and paying for them in the future
  • Additional costs = interest and service fees
    - Depends on loan type; amount and length of time

Advantages:
- Dont need to carry cash
- Consumers who dont have cash can buy essential goods and services
- Businesses get a market for their goods that consumers couldnt otherwise afford
- Can buy expensive articles more quickly than saving up for it
- Build up good credit record when you pay off your credit accounts regularly

Disadvantages:
-Buy things you odnt really need
- Paying monthly accounts = burden for consumer
- Easy to exceed your budget if you dont manage purchases

27
Q

Explain debits cards fully

A
  • A plastic card that provides an alternative payment method to cash making purchases
  • Used to make electronic withdrawals from the funds in your current or savings account
  • Can make withdrawals at ATM
  • Pays seller immediately by withdrawing funds from buyers account
28
Q

Explain cash on delivery fully

A
  • Payment for goods that are delivered to the buyer
  • COD allows you to pay at the time of delivery instead of having to pay upfront
    If you cant pay for goods when they are delivered, goods = returned to the sender
  • reduces risk of fraud or non-payment for seller and buyer
29
Q

Explain cash with order fully

A
  • Pay for goods bought when you order them
  • Mail order and internet purchases use this method
  • Disadvantages = dont see goods before paying for them and can take a long time to arrive
    -No discount is given
30
Q

r rExplain monthly or charge accounts

A
  • Non revolving credit accounts
  • In good standing with suppliers = use account to make purchases
  • Receive a statement about how much youve spent and pay in full at end of month
    -No interest charged unless amount is overdue
31
Q

Explain store cards fully

A

-Allow you to buy on credit at any retail stores branch across the country
-Store rates your credit worthiness and gives you a credit limit
-Buy goods = own them immediately
- Can pay in installments over a short period
- Need a min installment per month
- No interest on accounts that are paid in full within 30 days of purchase

32
Q

Explain the ads and dis of credit cards

A

Advantages:
- Convenient payment method for online or over the phone purchases
- Can use at ATM to draw cash
- Purchases = only paid for at end of month
- Useful in emergencies
- Credit card statement = proof of purchase
- Some have additional benefits
- Dont need to carry large amounts of cash around

Disadvantages:

  • Can be physically stolen or lost or someone may steal your CC number and make unauthorised purchases
  • Terms and conditions are complicated
  • Late payments = blacklisted / damaged credit
  • Cost much more tha other credit forms if not paid on time
  • Financial burden ( get into more debit than you can handle )

grade 11 consumers (3 decks)

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