Topic 5 - Financial planning

Question 1

examples of planned events

Answer 1

• life events e.g going to uni, weddings
• retirement
• death

Question 2

positive unplanned events

Answer 2

• events that bring in more income r.g winning the lottery, being promoted with a higher salary

Question 3

negative unplanned events

Answer 3

• spending money e.g car breakdown repair, redundancy or illness

Question 4

features of effective financial planning

Answer 4

• realistic
• clear
• timely
• flexible
• documented.

Question 5

budgets

Answer 5

• a financial plan drawn up each month to show expected income, expenditure and end of month balance
• short term but is the basis of longer term planning

Question 6

saving

Answer 6

putting a certain amount of money away monthly for a period of time until the amount has been reach

Question 7

borrowing

Answer 7

getting into debt to achieve aspirations
- financial plan must allow repayments to be made after money has been borrow, which means giving up on expenditure

Question 8

Insurance

Answer 8

Life assurance and pension funds

Question 9

consequences of not planning financially

Answer 9

• less likely to achieves wants and aspirations, especially in medium and long term
• loss of control of finances
• borrowing and not making repayments shows up on financial footprint
• can have serious consequences when people are older