Topic 1 Flashcards
Assets
Things that a business/person owns
Bank Rate
Interest rate that the bank of England uses when it lends money to other banks. Providers take account of bank rate when deciding how to set interest rates on their own products.
bankruptcy
a situation in which a person cannot pay their debts and is the subject of a court order that shares their assets between creditors
budget
plan of expected incomings and outgoings over set time period. Is also a term given to governments annual spending plan, which the Chancellor sets out in the house of commons each year
cash-flow forecast
plan of expected incomings and outgoings over several time periods, such as next 3 months or year
contingency plan
plan to deal with unexpected changes in income/expenditure
Credit union
A mutual organisation (that is, owned by its members) that provides a
range of financial products to members, eg savings accounts and
personal loans.
Deficit
Where expenditure exceeds income
Discretionary
expenditure
Spending on products and services that people want now, and savings
towards items they aspire to buy in the future; it is spending or
saving that people can choose to do or not.
Disposable income
The amount of money left over once mandatory and essential
expenditure has been paid out.
Essential
expenditure
Spending on items required to live, eg rent or mortgage repayments,
food and drink, water supplier, gas and electricity
Financial capability
Being able to manage personal finances effectively
Fixed interest
Paying the same rate of interest until the end of the savings,
investment or loan term.
flexible financial planning
Making financial plans to cover wants, needs and aspirations over the
medium to long term, which make allowance for unexpected
expenses and changes in circumstance (eg by including saving and
insurance).
Hire purchase
type of secured consumer credit, to finance items e.g. cars, involves borrower replaying over number of years
Income protection insurance
policy that allows people to manage risk of loss of earnings over a long erm. pays out a monthly income to insured people who have suffered accidental injury / long-term illness and therefore cant work
individual savings account
account thats pays intrest tax-free. Can pick to save entire money in cash, or in stocks and shares, or mix both.
Inflation
general rise in prices, which means the purchasing power of money falls
insolvency
situation in which a person cannot repay what the owe because their debts are greater than their assets
insurance
products that give financial protection against certain events.
investments
money thats paid into financial products . the aim is that the value of the product will grow over time so the person will receive a high return
Mandatory
expenditure
Compulsory outgoings; they do not necessarily apply to everyone but
if they do apply, they must be paid.
Money-purchase pension scheme
pension scheme in which the value of the fund available at retirement is based on the contributions made by an employee which are invested.
Mortgage
A loan taken out to pay for a property, usually over a long term such
as 25 years
Mortgage payment protection insurance
an insurance policy intended to cover mortgage repayments in the event or illness or unemployment
national insurance contributions
money deducted from the pay of people who are employed or self-employed and is used by the gov to fund state pensions and other benefits
non financial investments
investments in items such as fine wines, art ect
notice account
account for which the holder has to tell the provider in advance if they want to withdraw their money. if they do not give the provider notice, they can lose interest on your savings
pension
income that people recieve after retiring from work
personal debt
debt owed by individual consumers
recession
period of at least 6 months in which the amount of good and services the country is producing is shrinking
repossession
legal process where a finanical institution takes ownership of an asset because loan repayments relating to the asset have not been met.
savings bond
saving product held for a fixed period. e.g. two years.
shares
also known as ‘equities’, investments that represent part-ownership in a company.
sustainable personal finance
achieving and maintaining a balance between personal income and expenditure to satisfy needs, wants and aspirations.
flexible financial plan is …
balanced
informed
able to adapt to changing products/services
fluid
realistic
