Learning Outcome A: Understand the importance of managing personal finance Flashcards

Question

Money received from presents may be spent as attitude will be that this is to buy things you want. Which stage of life is this a financial implication of?

Answer 1

Any 2 from may look for a part-time job, still partially reliant on pocket money and more likely to receive cash as gifts and may be willing to save up smaller amounts in order to make bigger purchases.

Answer 2

Adolescence

Answer 3

Adolescence

Answer 4

Adolescence

Answer 5

Any 3 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

Answer 6

Young adult

Answer 7

Young adult

Answer 8

Young adult

Answer 9

Young adult

Answer 10

Young adult

Answer 11

Any 3 from savings accounts for specific purposes, paying a mortgage, planning for own future through pensions and retirement plans and likely to be the stage of life when income peaks but matched with high expenditure.

Answer 12

Middle age

Answer 13

Middle age

Answer 14

Middle age

Answer 15

Middle age

Answer 16

Any from mortgage payments stop or become lower and less income as reliant on pension rather than a salary

Answer 17

Adolescence

Answer 18

Adolescence

Answer 19

Young adult

Answer 20

Young adult

Answer 21

Young adult

Answer 22

Young adult

Answer 23

Middle age

Answer 24

Middle age

Answer 25

Middle age

Answer 26

Middle age

Answer 27

The proportion of an amount that is charged as interest to the borrower

Answer 28

Money owed

Answer 29

A score given to individuals on how likely they are to repay debts based upon their previous actions

Answer 30

When an organisation or individual legally states its inability to repay debts

Answer 31

The ability to meet day-to-day expenditure and repay debts

Answer 32

The build-up of debt

Answer 33

Your ability to borrow in the future

Answer 34

How much money you want to earn and place limits on how much you will spend

Answer 35

A safety net for the future, for example to provide insurance against loss or injury

Answer 36

Any 6 from avoid getting into debt, control costs, avoid legal action and/or repossession, remain solvent, maintain a good credit rating, avoid bankruptcy, manage money to fund purchases, generate income and savings, set financial targets and goals, provide insurance against loss or illness and counter the effects of inflation

Answer 37

repossession

Answer 38

bankruptcy

Answer 39

income and savings

Answer 40

targets and goals

Answer 41

loss or illness

Answer 42

Any 7 from cash, debit card, credit card, cheque, electronic transfer, direct debit, standing order, pre-paid card, contactless card, charge card, store card, mobile banking, BACS, CHAPS

Answer 43

Notes and coins in a wide range of denominations

Answer 44

Issued by banks with payments for goods and services being deducted directly from a current accoutn

Answer 45

Issued by financial institutions allowing customers to delay payments for goods and services

Answer 46

A written order to a bank to make a payment for a specific amount of money from one person's account to another account

Answer 47

Payment is transferred directly from one bank account to another

Answer 48

An agreement made with a bank allowing a third party to withdraw money from an account on a set day to pay for goods or services received, e.g. pay a gas bill

Answer 49

An agreement made with a bank to transfer a fixed sum of money to a third party account on a set date on a regular basis, e.g. pay £30 for a phone contract each month

Answer 50

Money is uploaded onto a card with transactions then being withdrawn to reduce the balance

Answer 51

Cards containing antennae allow money to be transferred when the card touches a contactless terminal

Answer 52

Issued by financial institutions allowing customers to delay payments for goods and services for a short period of time. The balance must be paid off in full when a statement is issued

Answer 53

Issued by a retail outlet so that customers can delay payments for goods and services (similar to a credit card but only accepted by stores specified)

Answer 54

The ability to carry out financial transactions using mobile devices such as phones or tablets

Answer 55

A system that allows the transfer of payments directly from one bank account to another

Answer 56

A system that allows the transfer of payments directly from one bank account to another

Answer 57

Any 3 from most widely accepted form of exchange, physical not virtual, consumers feel confident when using and makes budgeting easier

Answer 58

Any 3 from no need to carry cash, secure method of payment with low risk of theft, widely accepted, offers a degree of protection on purchases and suitable for online transactions

Answer 59

Any 3 from allows a period of credit that is interest free, e.g. one month, most cards are widely accepted, loyalty schemes are often offered, e.g. collection points or cash back, offers a degree of protection on purchases and suitable for online transactions

Answer 60

Any 2 from low risk form of payment as the cheque can only be cashed by the named payee, widely accepted for face-to-face and postal transactions and no need to provide change as it can be written for an exact amount

Answer 61

Any 2 from almost instantaneous, provides a record of payment, no additional costs incurred and easy to use for one-off and more frequent transactions

Answer 62

Any 2 from an easy way to make regular payments, e.g. utility bills, amount paid can vary to ensure the payment matches the amount required by the vendor and quick and easy to set up

Answer 63

Any 2 from the same amount is paid each time making it easier for the payee to plan and budget, easy both to set up and to cancel and no need to remember to make regular, standard payments

Answer 64

Any 2 from can set a budget in advance to avoid overspending, if lost or stolen the loss is limited to the remaining balance and an effective way of controlling the amount spent by children and where money is spent, e.g. upload money for school lunches or transport

Answer 65

Any 2 from gaining in popularity, secure method of making payments and quick and easy

Answer 66

Any 2 from reduces risk of running up debts, allows a short period of credit, avoids the need to carry cash and often offers additional perks

Answer 67

Any 2 from allows a short period of credit that is interest free, e.g. one month and often offer loyalty schemes, discounts and special promotions or privileges

Answer 68

Any 2 from convenient as can be used at any time and place and secure

Answer 69

Any 2 from faster payment allows almost instant transfers that are guaranteed within 2 hours, can be accessed in a number of ways including in a branch, over the telephone and online and no additional costs

Answer 70

Any 2 from Transfers can be made the same day assuming instructions are received prior to a set time, e.g. 2pm at Barclays and there is no limit on the amount that can be transferred in a single transaction

Answer 71

Any 2 from can be lost or stolen, threat of counterfeit, only really appropriate on purchase up to a certain amount and cannot be used online

Answer 72

Any 2 from short time lapse between making the transaction and the money being withdrawn from the customer's account may result in overspending and not accepted or appropriate for small transactions

Answer 73

Any 2 from interest is charged on balances not paid off within a month, can encourage a customer to overspend and get into debt, interest is charged on cash withdrawals and a limit will be set on the amount of credit allowed

Answer 74

Any 2 from expensive for the consumer if the bank refuses to clear the cheque, i.e. it 'bounces', the time delay between writing the cheque and it being cashed could cause a consumer to go overdrawn, viewed as old fashioned and easy for the consumer to make errors when writing the cheque which will create problems for both the consumer and the recipient

Answer 75

Any 2 from risk of loss if the transfer is incorrectly set up and not appropriate for face-to-face transactions

Answer 76

Any 2 from if the payer makes a mistake and takes too much it is the payee's responsibility to claim back the money and the payer determines the amount paid each time making it difficult for the payee to plan and budget

Answer 77

Any 2 from payments are taken regardless of the customer's balance which could lead to the unplanned use of an overdraft facility and payments will continue to be made unless cancelled

Answer 78

Any 2 from no protection if lost and sometimes requires an initial fee to purchase or set up the card, e.g. Oyster travelcards

Answer 79

Any 2 from often only accepted for relatively small transactions and still not widely accepted as seen as new technology

Answer 80

Any2 from must be paid in full each month and often an annual fixed fee is applied

Answer 81

Any 2 from only accepted in issuing store or linked associations, interest is paid on outstanding balances and can encourage overspending and result in a consumer getting into debt - particularly if they hold multiple cards

Answer 82

internet banking

Answer 83

Any 2 from faster payment is not offered by all banks or branches and the customer may therefore have to default to BACs which can take three days to transfer payments and a limit is set on the amount that can be transferred in any single transaction

Answer 84

Normally, there is a fixed charge per transaction regardless of the amount transferred

Answer 85

An account with a bank or building society that is designed for frequent use

Answer 86

On a daily basis

Answer 87

False, there is no need to give notice

Answer 88

Any 2 from to get wages paid into, to pay cheques into and out of, pay bills and other frequent expenses and to withdraw cash

Answer 89

Any 3 from rate of interest paid on any positive balance, rate of interest charged on a negative balance, an overdraft limit, charges on unauthorised overdrafts and additional incentives

Answer 90

Packaged/premium

Answer 91

Any 2 from no charges on credit balances, offers the holder a wide range of facilities including a cheque book, debit/cash card and possibly an overdraft facility, convenient for receiving regular payments e.g. wages and making regular withdrawals

Answer 92

Any 2 from potentially high charges on the use of an overdraft facility and standard features only, i.e. no additional perks

Answer 93

Any 2 from no charges on credit balances, offers the holder a wide range of facilities including a cheque book, debit/cash card and possibly an overdraft facility, convenient for receiving regular payments, e.g. wages and making regular withdrawals, offers the holder additional perks at a packaged price cheaper than acquiring them individually (standard additional features include things such as holiday/travel insurance, break down cover and phone protection)

Answer 94

Any 2 from additional monthly charge is frequently applied and the package offered may not offer value for money or meet the needs of the individual account holder

Answer 95

Any 2 from available to customers with a low credit rating and offers an easy first step for individuals to gain access to basic banking facilities, i.e. the ability to pay in and withdraw cash

Answer 96

Limited facilities e.g. no debit card or overdraft facility

Answer 97

Any 2 from course fees and student loans can be easily handled and bonuses offered are designed to meet the needs of learners, e.g. discounts on travel or small lump sum cash payment

Answer 98

Any 2 from overdraft facilities could encourage overspending, charges for overspending are high and limited facilities

Answer 99

withdraw money that you do not have from a current account

Answer 100

Short term needs such as shortage of cash just before payday

Answer 101

Borrow a set amount of money, normally for a specific purpose, to be repaid in regular instalments with interest

Answer 102

False, they do

Answer 103

For a specific purpose

Answer 104

In regular instalments with interest

Answer 105

A high price item such as a car or to make home improvements

Answer 106

Have use of an item immediately it pay for it in regular instalments

Answer 107

In regular instalments

Answer 108

One-off or infrequent purchases, for example a TV or fridge freezer

Answer 109

The purchase of assets

Answer 110

Assets that will maintain value for a long time and cannot normally be paid for outright

Answer 111

Goods are paid for by card and can be paid for either at the end of a set period, normally a month, when a statement is issued or over time with the card provider stating a minimum payment each month. The minimum payment will be a percentage of the balance on the credit card

Answer 112

At the end of a set period, normally a month

Answer 113

When buying high price goods or services, for example a holiday, or at times when expenses are higher than usual, for example Christmas, to spread the costs of spending

Answer 114

Short-term

Answer 115

To bridge the gap between now and receiving a wage

Answer 116

small, high

Answer 117

In an emergency to meet cash shortages

Answer 118

Any 2 from interest is charged only on the amount outstanding, can be paid off without penalties, an overdraft facility can be prearranged and only used if needed and provides a short term solution to cash flow problems

Answer 119

Any 2 from regular, pre-agreed payments make planning and budgeting easy, as a general rule these would only be issued to individuals who can prove their ability to make the repayments and useful when looking to purchase a specific item of medium to high value, e.g. a car or home improvement

Answer 120

Any 2 from spreads the cost of an expensive item over a period of time, credit is secured against a specific item and often allows a customer to afford something now that they could not otherwise afford, e.g. four years interest free on furniture

Answer 121

Any from allows the customer to spread the cost of expensive items over a long period of time, e.g. the purchase of a house is often spread over 25 years and interest rates, depending upon the mortgage deal, can sometimes be fixed or tracked against a standard rate of interest reducing the risk of fluctuations

Answer 122

Any 2 from the credit card holder can pay above the minimum rate if they wish and hence speed up the rate of repayment and reduce interest incurred, can be used for items of multiple sizes and add value, to a limit, without the need to secure against an asset and provides some protection on purchases

Answer 123

Any from help solve immediate short term cash flow problems and relatively easy to secure

Answer 124

Any 2 from when used, interest charges are often high, additional penalty charges for going over a pre-arranged limit are often very high, not the cheapest form of borrowing and the ease with which these can be obtained could encourage overspending

Answer 125

Any from may have to be secure3d against an asset which means if payments are missed the asset may be taken to cover the outstanding debt and not really suitable for short-term loans

Answer 126

Any 2 from interest charges may be higher than other traditional loans, ownership of the asset may legally be kept by the seller until the final payment is made and agreements can be manipulated to make a purchase seem deceptively appealing

Answer 127

Any 2 from interest payments, although sometimes fixed for a short period of time, can vary - this seriously affects the borrower's ability to repay or meet other expensive, failure to meet repayments may lead to a loss of a home and seriously affect an individual's future credit rating and penalties may be applied to early repayment

Answer 128

Any from can encourage overspending, sometimes on unnecessary purchases, and can lead to debt problems and interest rates are often higher than on a personal loans

Answer 129

Interest rates are very high and the cumulative amount to be repaid can quickly spiral out of control

Answer 130

Individual savings accounts

Answer 131

This is a type of saving account where the holder is not charged income tax on the interest received

Answer 132

These are accounts where interest is paid on the balance and normally the holder needs to give notice before withdrawing funds

Answer 133

A government scheme that that allows individuals to save up to a set amount by buying bonds. The bond holder does not receive interest on their savings but each bond is placed into a regular draw for cash prizes

Answer 134

These are fixed term securities where the lender (the individual) lends money to companies and governments in return for interest payments. The money is invested for a specified period of time

Answer 135

Shares involve investment in a business in return for equity, i.e. the shareholder becomes a part owner of the business. The shareholder will receive dividends from the company's profits and will also want the value of the shares to increase

Answer 136

These are long-term savings plans where individuals make regular contributions, called premium payments, throughout their working life. This is then repaid as either a lump sum, regular payments or a combination of the two upon retirement. Pensions can be state, company or private.

Answer 137

The amount of money you need to cover all your expenses/outgoings, e.g. your mortgage and bills.

Answer 138

Someone who has invested in a company in return for equity, i.e. a share of the business

Answer 139

False: they are not charged income tax on the interest received

Answer 140

government

Answer 141

buying bonds

Answer 142

draw for cash prizes

Answer 143

Companies and governments

Answer 144

Interest payments

Answer 145

A specified period of time

Answer 146

The shareholder becomes a part owner of the business

Answer 147

It will receive dividends

Answer 148

Premium payments

Answer 149

As a lump sum, regular payments or a combination of the two upon retirement

Answer 150

state, company or private

Answer 151

Any from tax is not charged on interest earned allowing the saver to keep all of the rewards for saving and interest rates are sometimes slightly higher than in alternative savings accounts

Answer 152

Any 2 from notice is often required to make withdrawals and according to the agreement there may be a limit set on the number of withdrawals made, if the saver makes more withdrawals than set out in the agreement then the penalty may cancel out the tax savings and there is a limit set on the annual amount that can be placed in an ISA

Answer 153

Any from interest is earned on positive balances and accounts sometimes require regular deposits of a set amount forcing the saver to follow a savings plan

Answer 154

Any from interest earned is taxed and the percentage rate of interest paid on savings is likely to be lower than interest to be paid on borrowing, therefore the benefits of savings are lost if the customer is borrowing at the same time

Answer 155

Any from chance of winning substantially more than could be earned in interest and can be easily withdrawn with no loss or penalty

Answer 156

Any 2 from no guaranteed return on investment, maximum amount reviewed annually by the government and the amount invested, assuming zero or low returns, loses value due to inflation

Answer 157

Any from regular fixed returns and spreads risk across a range of markets

Answer 158

Any from risk of losing some or all of the value of the investment if the bond or guilt value falls and interest payments may not be received if the issuer is unable to make payments

Answer 159

Any 2 from share prices fluctuate offering a potential high reward, shareholders' returns can include dividend payments and an increase in share value, as part owners in a business there may be additional benefits including discounts and special offers and for some investors share ownership is more than just a way of saving - it is a pastime and creates interest

Answer 160

Any 2 from share prices fluctuate offering a potential high risk and there is no guarantee of any reward or return as all of an investment can be lost

Answer 161

Any 2 from encourages individuals to save throughout their working life for retirement, depending upon the policy, an individual's savings may be boosted by an employer's contributions increasing the final value of the saving and regular payments are deducted, sometimes at source, meaning the individual is tied into making regular contributions

Answer 162

Any 2 from movement between jobs may mean that one policy stops and another starts, thus reducing the overall cumulative value of the savings, final outcome is difficult to predict and if compulsory payments are deducted this may affect short-term living standards

Answer 163

Greater wealth in the future

Answer 164

Placing money in a secure place so that it grows in value and can be used in the future

Answer 165

Speculative commitment to a business venture in the hope that it generates a financial reward in the future

Answer 166

It will hopefully grow as it gains interest

Answer 167

Often with a view to buying a specific good in the future or to support a planned future lifestyle

Answer 168

To pay future college fees or to support the child as he or she grows up

Answer 169

It is successful and a healthy return is made on the investment

Answer 170

Low/zero risk as money saved is guaranteed to be available in the future, however inflation can reduce the spending power of money saved

Answer 171

Interest payments and financial security/peace of mind

Answer 172

Investments can go wrong and all or some of the value may be lost. There is also no guarantee of a return

Answer 173

if successful, there is potential for a high financial return (significantly higher than could be earned in interest) and investing can be exciting. Some people will invest in shares, antiques, art or foreign currencies, for example, in the hope of high returns

Answer 174

An agreement with a third party to provide compensation against financial loss in line with the conditions laid down in the policy agreement

Answer 175

Regular payments made by an individual or company to an insurance provider in return for protection

Answer 176

Any 5 from car, home and contents, life assurance and insurance, travel, pet. mobile and health

Answer 177

Against anything deemed to have a worth or where there is a risk of financial loss

Answer 178

The amount of cover provided and the amount of risk as assessed by the insurance provider

Answer 179

False, it covers theft and accidents

Answer 180

Whether the policy is third party or fully comprehensive

Answer 181

The drier, passengers and other road users

Answer 182

The physical building, for example against fire

Answer 183

Physical items in a house including electrical equipment, furniture and personal items

Answer 184

specified, policy

Answer 185

a lump sum upon death

Answer 186

You die within that time period

Answer 187

False, they often insist upon life insurance

Answer 188

To secure repayment of the mortgage if the holder dies while monies are still owed

Answer 189

Protects individuals or groups while abroad

Answer 190

Any 2 from to cover a specific trip, multiple trips or for all trips within a year

Answer 191

Loss or theft of property, illness, cancellation and emergencies up to predetermined limits

Answer 192

Due to the high level of risk associated

Answer 193

Some or all of the expenses associated with treating ill or injured pets, i.e. vets' fees

Answer 194

Medical expenses including assessments, treatments and loss of earnings

Answer 195

To receive payments if, for example, time is spent in hospital, or to receive private treatment

Answer 196

Any 2 from meets legal requirements, protects self against theft or damage and protects against damage caused to a third party

Answer 197

Any from premiums can be high depending upon assessed level of risk, e.g. expensive for young drivers and normally there is an excess that must be paid, e.g. first £500 of all damages is still the responsibility of the car owner

Answer 198

Any from protects against damage which may otherwise be too expensive to repair resulting in the loss of a home and contents are protected both when inside the house and outside

Answer 199

Premiums are an additional expense to home ownership and some items cannot be replaced due to a value beyond the financial worth, e.g. a painting or inherited piece of jewellery

Answer 200

Provides peace of mind to family following the bereavement of a homeowner

Answer 201

If the policy holder does not die within the period of life insurance no payment is made (could be seen as an advantage)

Answer 202

Any 2 from provides protection for personal belongings when away from home, covers medical costs when on holiday and protects against cancellation and sometimes delays

Answer 203

Any from the person suffering the loss is likely to have to pay upfront to replace items or cover medical costs and then reclaim later and an there is an additional cost when travelling abroad

Answer 204

Any from avoids expensive vet fees and if vet fees are too high, there may be no alternative to having the pet put down - insurance can avoid this

Answer 205

An additional monthly expense to protect against the unexpected

Answer 206

Any from some compensation is provided when ill which can reduce the financial burden and stress allowing the patient to concentrate on recovery rather than financial worries and if used to fund private care, this often results in quicker treatment and better facilities

Answer 207

Any 2 from you are paying for something that you hope you will not use, premiums can be expensive depending upon the degree of cover required and will not cover pre-known conditions