Spending & Saving Flashcards
How has Spending and Saving been apart of our lives throughout childhood and adulthood?
Think back to the beginning of the topic when we explored the factors that contributed to ‘spending and saving’.
When you were little and still to this day, you may receive an allowance which provides you with an ‘income’ to buy some basic needs and more particularly your wants.
However as you prepare for adulthood, personal finances; meaning your type of income, savings and investments become more and more important to your financial success.
Save Definition:
To save means to put some money aside now in order to spend it later.
Why do people save?
People save for many reasons. The most common reasons is that they cannot afford to purchase a good or service now because they do not have enough money.
What factors contribute to our decision to spend or save? (idraw)
A number of factors contribute to our decision to spend or save including,
Where we are an impulse buyer or a ‘scrooge’
Our disposable income
How risk averse we are (that is how willing we are to take a chance that we may lose the money)
Our age,
How much wealth we have already accumulated
Reasons for Investing (issi)
We invest money to increase our wealth and to provide for our future needs. There are FOUR main reasons why people decide to invest:
Investing for extra income
Saving for a ‘rainy day’
Saving for a major purchase
Investing for retirement
Different Investment Options:
When we invest our money, we do in the expectation that there will be a return. An important point to remember is that the higher the return, the greater is the risk that we could lose our money.
Low Risk/ Low Return to High Risk/ High Return Investments (bgpsms)
Lowest
- Bank and Building Society and Credit Union Accounts
- Government bonds and securities
- Property & Real Estate
- Superannuation Funds
- Managed Funds
- Share Market
Highest
