Unit 3 Finance

Question 1

What are the functions of Money

Answer 1

1. Unit of account
2. Store of value
3. Legal tender
4. Legal tender

Question 2

What are the roles of money (influences)

Answer 2

Personal attitudes
(Such as take risk or stay safe and save)

Culture
( such as religion, beliefs, ethics and principles)

External influence
(Such as state of economy or availability of jobs)

Life stages 
(When you go through 5 stages financial situations change)

Life event
(such as moving home and being made redundant)

Interest rates

Question 3

Why plan expenditure

Answer 3

Control costs

Avoid getting into debt

Counter the effects of inflation

Provide insurance against a loss or illness

Set finance goals

Generate income and savings

Manage money to fund purchases

Avoid bankruptcy

Maintain a good credit rating

Remain solvent

Avoid legal action and/or repossession of goods on your home

Question 4

What are Benefits of planning

Answer 4

A good credit rating means you will be able to borrow money to fund a large purchase such as a car or your home.

Money not spend on essentials can be saved and earn internet to generate an income.

Savings can be used to fund purchases or be available to pay for unexpected expenses

Question 5

What are the risks of not planning

Answer 5

Getting into debt because you cannot pay bills.

Having insufficient funds to pay loan repayment

Having legal action taken against you for non payment of loans or Goods you couldn’t pay for (repo)

Poor credit rating which affects borrowing

Not being able to save for the future

Question 6

Ways to pay

Answer 6

Cash 
Credit card 
Cheque 
Debit card 
Standing order