Learning Aim A: Personal & Business Finance Flashcards
This refers to anything that allows the value of something to be expressed in an understandable way, and in a way that allows the value of items to be compared.
Unit of Account
Money that has a legal sanction by the government behind it is called legal tender means money under the law of land
Legal Tender
The importance of money may change depending on certain life events. For instance when you first buy a home, the role money plays in your life may now be more important.
Role of Money - Life Events
The state of the economy and the jobs market may mean that money plays and bigger or less valuable part of your life. These external influences are out of your control but still impact the role money plays.
Role of money - external influences
Needs of people in their old age? Use of pensions and any savings. People in this age bracket may downgrade to a smaller home.
Life Stages
Knowing what money is coming in and going out is important as it ensures you are not overspending and therefore avoids debt.
Financial Planning - Avoiding Debt
By planning expenditure you are aware of your expenses and can control costs by making adjustments to your finances
Financial Planning - Controlling Costs
A consequence of not planning expenditure is that you could overstretch your finances and become unable to pay bills. This could then lead to legal action to reclaim the cost of unpaid items or repossession of an item eg house.
Financial planning - avoiding repossession
A written order to a bank to pay a stated amount from an individuals account to another.
Cheque
This is an instruction from you to your bank or building society. It authorises the organisation you want to pay to collect varying amounts from your account
Direct Debt
This is a way of setting up a regular, fixed payment from your bank account.
Standing Order
Allows money to be transferred by touching the card on a contactless terminal.
Contactless Payment
A card used to make purchases now and pay for them later.
Credit Card
This is a type of bank account that keeps your money secure and helps you manage your finances.
Current Account
This account has a monthly fee in return for additional benefits such as breakdown cover, cashback on purchases, home insurance and payment protection. These may not always be value for money.
Premium Bank Account
An account designed to benefit students. Especially useful for students attending university as they provide interest free overdrafts, rail cards and discounts off eating out.
Student Bank Account
This current account is mainly used by people who have a poor credit rating and struggle to open a standard account. It has limited facilities and no overdraft available.
Basic Bank Account
Allows you to borrow money for a specific purpose such as improving your home or buying a car. They are a longer term form of borrowing for higher priced items
Personal Loan
A hire purchase is an arrangement where a customer agrees to a contract to buy an asset by paying off the amount in regular instalments.
Hire Purchase
This is a long term loan for example paid back over 30 years. The loan is secured against an asset such as a house.
Mortgage
A short term source of finance that is available over a very short period of time with very high amounts of interest.
Payday Loan
The main difference between an ISA and any other savings account is that it offers tax-free interest payments,
ISA (Individual Savings Account)
This is an investment product issued by National Savings and Investment (NS&I).
Premium Bonds
Money allows goods and services to be traded without the need for a barter system. Barter systems rely on there being a double coincidence of wants between the two people involved in an exchange.
Means Of Exchange
This can refer to any asset whose “value” can be used now or used in the future i.e. its value can be retrieved at a later date. This means that people can save now to fund spending at a later date.
Store of Value
These are fixed term securities where the lender lends money to companies and governments in return for interest payments.
Bonds and Gilts
Part ownership of a business. Shareholders receive a dividend from company profits.
Shares
Long term savings plan were individuals make regular contributions. Savings are made for retirement.
Pensions
Is a legal requirement in the UK and covers you in case of an accident, fire or theft depending on the level of cover purchased.
Car Insurance
Buildings insurance covers the physical building itself and in case of fire or structural damage. Contents insurance covers item within the house such as electricals, carpets and furniture. There is also the option to cover item when they are not at home.
Home and Contents Insurance
A policy that pays a lump sum upon death. Life insurance is usually required when purchasing a home to ensure the mortgage is covered if the homeowner dies.
Life Insurance
Protects you while abroad. Typically covers illness, holiday and flight cancellations, theft and emergencies.
Travel Insurance
Protects the owners of pets from expenses associated with looking after a pet such as illness or injury of the animal.
Per Insurance
Covers individuals, families and employees via a payment plan that may include going to the dentist or opticians.
Health Insurance
Degree of uncertainty of return on an asset; in business, the likelihood of loss or reduced profit.
Risk
The benefit or return gained from an investment.
Rewards
An account where interest is paid on the balance
Deposit/Savings Account
Occurs when money is withdrawn from a bank account and the available balance goes below zero
Overdraft
A system that allows the transfer of payments directly from one bank account to another. Payments are made on the day you make them.
Clearing house automated payment system (CHAPS)
A system that allows the transfer of payments directly from one bank account to another
Bankers’ Automated Clearing Service (BACS)
A type of banking whereby transactions are made via a smartphone or tablet app. The account holder can transfer money between accounts, pay bills, deposit checks, and monitor account activity.
Mobile Banking
A credit card that can be used only in one store chain of stores
Store Cards
Like a credit card, when you buy now and pay for something later.
Change Cards
Money is uploaded onto a card with transactions then being withdrawn to reduce the balance
Pre-paid Cards
The transfer of funds from one account to another via the internet or telephone
Electronic transfer
A general and progressive increase in prices
Inflation
Protection against possible financial loss
Insurance
Targets that an individual sets in regard to saving or spending.
Financial Targets and Goals
Ability to add to your income or savings
Income and Savings generation
How a person handles money by spending and saving
Manage Money
A legal process to get out of debt when you can no longer make all your required payments
Bankruptcy
A measure of a person’s ability and willingness to make credit payments on time
Credit Rating
An ability to pay debts
Solvent
The use of the courts as a means of asserting rights and interests
Legal Action
Taking away property due to failure to make loan or credit payments
Repossession
Money that is owed to an individual or financial institution.
Debt
The cost of borrowing money
Interest Rates
The enduring behaviors, ideas, attitudes, values, and traditions shared by a group of people and transmitted from one generation to the next
Culture
Individuals that will vary in their attitudes to risk and reward as well as savings and borrowing.
Personal Attitudes
