Topic 5: Financial Planning Flashcards
Arrears
An unpaid overdue debt
Audit
Evaluation of a person’s finances
Balance
Income minus expenses
Budget
A plan of expected incomings and outgoings over a set time period. It’s also a term given to the government’s spending plan which the chancellor sets out in the House of Commons
Budget deficit
A situation in which ongoings exceed income
Cash flow analysis
Putting a monthly budget together by looking at cash inflows and outflows and calculating the net balance at the end of a specified time period
Cash flow forecast
A plan of expected incomings and outgoings over several time periods
Credit reference agency
Independent organisation that maintains records of people’s credit history. That is, what they have applied to borrow, what they have borrowed and whether they have paid it back. The data is provided by lenders
Credit Report
Details of money borrowed and repaid by an individual. These records are held by credit reference agencies and providers will check them when a prospective customer applies for a borrowing product
Direct debit
Electronic payment out of an account, amount and frequency of direct debit can vary
Discretionary expenditure
Spending on products and services that people want now and savings towards items they aspire to buy in the future, it’s spending that people chose rather than have to do
Essential expenditure
Spending on items required to live. Such as rent or mortgage repayments, food and drink, water supplier, gas and electricity
Financial planning
Planning one’s expected incomings and outgoings over the short, medium or long term
Flexibility
An individual’s ability to react to unexpected events. A financial plan should take such events into account, allowing a person to make changes to the plan when necessary.
Income
Earnings, savings and interest payments received
Liabilities
Current financial obligations, such as an overdraft or an outstanding credit card balance
Mandatory expenditure
Compulsory outgoings, such as road tax. They don’t necessarily apply to everyone but if they do, they must be paid
Net worth
The sum of a person’s assets minus all debts and obligations, known as estate
Overdraft (authorised and unauthorised)
A facility that allows an account holder to withdraw more money than they have in their account. An authorised overdraft is agreed with the bank in advance within certain limits. Exceeding those limits or going overdrawn without permission is an unauthorised overdraft, and attempted withdrawls may not be honoured
Risk assessment
Anticipating the likelihood or risk of something happening in the future and the effect that such an event would have on an individual or their situation.
Self-employment
Earning an income by selling your goods/services directly to a consumer rather than being employed by somebody else and being paid a wage or salary
Standing order
Electronic payment out of an account, they’re use to make regular payments of the same amount
Stock market
buying and selling of company shares, takes place on a stock exchange
