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1
Q

\What are the four functions of money?

A

Unit of account
means of exchange
store of value
legal tender

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2
Q

What is unit of account?

A

value goods and services
exchange money for something equivalent in value of goods and services

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3
Q

What is means of exchange?

A

buying or trading goods and services for money or swapping products and services (bartering)

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4
Q

What is store of value?

A

Value of money

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5
Q

What is legal tender?

A

National currency of a country used to pay for goods and services

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6
Q

What are 6 factors that influence peoples view on money?

A

Personal attitudes
Life stages
Culture
Life Events
External influencee
Interest rates

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7
Q

How does Personal attitudes affect peoples influence on money?

A
  • risky or play it safe (savings or stock)
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8
Q

How does life stages affect peoples influence on money?

A

priorities and needs change as you age

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9
Q

How does life events affect peoples influence on money?

A

moving home, getting new jobs/raises or being made redundant change how people save and spend

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10
Q

How does culture affect peoples influence on money?

A

how background, culture, religion and ethical beleifs shape view on money

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11
Q

How does external influence affect peoples influence on money?

A

Events outside your control, making the person either more likely or less likely to save or spend money.

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12
Q

How does interest rates affect peoples influence on money?

A

Big impact on how much you borrow and what for

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13
Q

What are the benefits of planning expenditure?

A
  • good credit rating means you can borrow more money
  • money not spent can be saved
  • savings cn be used for unexpected expenses
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14
Q

What are risks on not planning expenidture?

A
  • get into debt as can’t pay bills
  • insufficient fund to pay loans back
  • legal action taken against you
  • poor credit rating make sit harder to borrow money
    not being able to save for future
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15
Q

What are 11 reasons to plan expenditure?

A

Control Costs
avoid legal action
remain solvent
maintain good credit rating
avoid bankruptcy
manage money
generate income and savings
set financial goals and targets
provide insurance
counter inflation
avoid debt

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16
Q

What are the ways to pay?

A

Cash
Debit card
Credit Card
Cheque
E-transfer
Direct Debit
Standing Order
Prepaid Cards
Contacless cards
Charge Cards
Store Cards
Mobile Banking
BACS and Faster Payment
CHAPS

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17
Q

What are the four types of current accounts?

A

Standard account
Packaged premium account
Student account
Basic account

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18
Q

How many ways to borrow are there?

A

6

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19
Q

What are the different ways to borrow?

A

Overdraft
Personal loan
Hire Purchase
Mortgage
Credit Card
Payday Loan

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20
Q

What is a positive and a negative of an overdraft?

A

+ usually free to set up pay interest on what you borrow
- Interest rates tend to be very high

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21
Q

Positive and negatives of a personal loan?

A

+ monthly installments alllow planning your expenditure
- may have arrangement

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22
Q

Positive and negative of Hire Purchase?

A

+ can buy a more expensive item at a price you can afford
- while paying can not sell on the item as you do not own it

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23
Q

Positive and negative of a mortgage?

A

+ allows you to buy a home and spread the cost over a longer period of time (up to 25 years)
- an increase in intreset rates may affcer your ability to pay a mortgage

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24
Q

Positive and negative of a credit card?

A

+ if you pay full amount each month you get no interest
- if you pay minimum amount on balance you have to pay interest

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25
Positive and negative of payday loan?
+ Can help with cash-flow problems - Very expensive way to borrow
26
What are the 8 different types of savings accounts?
Individual savings accounts Deposit and savings accounts Protected savings Returns and Risks Premium Bonds Bonds and Gilts Shares Pensions
27
What are the 6 main types of insurance?
Car insurance Home and contents insurance Life insurance and assurance Travel insurance Pet insurance Health insurance
28
Positive and negatives of car insurance?
+ meets legal requirments + 3 levels of cover for individual requirments + can build up a no claim bonus + provides protection against liability claims from other drivers - expensive for new and younger drivers - Policy excess can add to costs in the event of a claim
29
Positive and negatives of home and contents insurance?
+ Contents covers the cost of damage or loss to personal posessions + home isnurance covers the cost of rebuilding or repairs from fires, flooding or subsidences - additionally security precautions can reduce premiums - only covers cost of rebuilding the property not market value
30
Positive and negtives of health insurance?
+ Covers some or all of private medical costs with convenient treatment times + You can chose types of illnesses and treatment you want to cover - Pre-existing medical condtions are not covered - Medical conditions which arise during the initial period of the policy may not be covered
31
Positive and negatives of pet insurance?
+ Vet bills can be expensive + Can opt for lifetime coverage of serious illnesses for an additional premiums + Cover provided for personal injury or damage caused by the animal - Pre-existing medical conditions not covered - Vaccinatations are not covered - some policies will linit the amount of medical expenses covered
32
Positive and negatives of travel insurance?
+ Provide cover for delays, cancelations or curtailment of the trip + Provides cover for loss of personal belongings on the trip + Provides for emergency medical expenses on the trip - payouts may not cover the full amount - High risk sport requires additional premiums - Pre-existing medical conditions are not covered
33
Positive and negatives of life insurance and assurance?
+ Life insurances pays out a sum of money in the event of death + Life assurance us a mixture of life isnurance and investment + can be used as collateral - Pay-out may be larger than the total amount of premiums paid - Life assurance pay-outs are linked to the performance of investments - Pre-existing medical conditions are covered
34
What are the financial needs and implications during childhood?
Needs = rely on parents, limited needs with exception of sweets and toys Implications = rely on pocket money, money as a present may be spent immeditaley as you may want to get something.
35
What are the financial needs and implications during adolesence?
Needs - want to be more independent Implications - may be looking for a part time job, partially reliant on pockt money, recieve more cash instead of gifts and more likely to save
36
What are the financial needs and implications during young adult?
Needs - starting uni or a career, want to be more independent, buying a car/buying or renting a flat/house, looking at a mortgage, eligible for a credit card
37
What are the financial needs and implications during middle age?
needs - support a family, save for childrens future, improve own lifestyle implications - specific saving accounts, paying a mortgage, planning for own future with things like pensions
38
What are the financial needs and implications during old age?
needs - fewer dependents, may downsize, fewer financial needs and assets, implications - mortage payments stop or become lower, less income as have a pension not a salary
39
What are features of a standard account what do you need to set one up?
need a fair credit rating, features: no banking fees, cheque book, bancard with contactless payment, salary can go directly into account, has an overdraft facility (may have high interest)
40
What are features of a packaged premium account what do you need to set one up?
fair credit rating must pay monthly fees. - get benefits like travelers insurance, or discounts on goods and services. interest on credit balances,cash back on household bills payed by direct credit, special interest rates on overdrafts
41
What are features of a student account what do you need to set one up?
need to be a student typically in higher education as helps them manage finance interest free overdraft up to a certain amount. debit card and some accounts have free gift cards or travel discounts.
42
What are features of a basic account what do you need to set one up?
aimed for those with poor credit ratings. no banking fees, debit card, a facility is set up to pay bills directly.
43
What is an overdraft?
A short term loan used to pay bills when short of cash, arrange with the bank how much you recieve when balance in bank reaches zero
44
What is a personal loan?
A loan used to buy expensive items such as household goods or a car, fixed amount pay it set monthly installments, one to five years
45
What is a hire purchase?
Usually used to buy a car, put down a deposit then monthly instalments over a period of one to five years, afterpayment you own care, not yours during period
46
What is a mortgage?
this is a loan taken out to buy a property, usually for 25 years and you pay off the mortgage in monthly installments
47
what is a credit card?
used to buy goods and services,have to pay back what you spend at end of month or get interest. (limit)
48
What is a payday loan?
This is a short-term loan usually for small amounts often when people need cash to pay bills between paydays a fee is charged.
49
What are pensions?
They are long term saving schemes to help you retire, money gets payed into by employees by National Insurance contribution. Workplace pensions put some of employees pay into a pension too (normally has a contribution).
50
What are shares?
Give people part ownership of a company, recieve payments or dividends depends on how the performance and profits of the company, lose investment if company underpeforms, could pay tax if recieve a large dividends
51
What are premium bonds?
Premium bonds do not recieve interest, payers could win tax free cash, secure savings but no return unless you win, can cash in bonds when you no longer want them.
52
What are bonds and gilts?
fixed term securities were you lend money to companies and governments in turn for interest
53
What are returns and risks?
saving money normally safe, but investing in shares is a high risk as depends on business performance. returns for low risk investments are lower than high risk investments. savings may be useless if interest rate is lower than inflation rate.
54
What is The FSCS?
The Financial Service Compensation Scheme guarantees deposists up to a set limit of £85 000 per investor per bank or building
55
What are deposit and savings accounts?
An easy access savings account These accounts pay variable amounts of interest which is taxable. a fixed deposit account puts a set interest over a time period into the account, can not withdraw in this period
56
What is an ISA?
Individuals Savings Account, allows you to pay tax on interest or profits you earn, limit on how much you can put in each year, may need to give notice for withdrawls
57
What are the two main types of ISA's?
Cash ISA's - Savings account where interest is tax free. Stocks and Shares ISA's: Funds are invested and profits/returns are tax free
58
Compare cash and stock ISA's?
Cash ISA's are less risk than stocks and shares ISA's, as stocks and shares while have a greater gain can also leed to a loss of capital, both charge a management fee.
59
What are the other two types of ISA's?
Innovitave Finance ISA Help to buy ISA
60
Whats an Innovative Finance ISA?
Interest is earned from lending money to other people or companies called peer to peer lending.
61
What is help to buy ISA?
helps people buy their first property
62
What are the advantages and disadvantages of cash
+ Accepted in most places - can be stolen or counterfieted, can not be used for online retail
63
What are the advantages and disadvantages of debit cards?
+ payment comes directly from payers bank account, secure, can be contactless, can be used online - could overspend, card can be lost or hacked
64
What are the advantages and disadvantages of credit card?
+ goods and services paid by cardholder, short interest free period, can be used online - interest charged, could overspend, retailers may charge a credit card fee
65
What are the advantages and disadvantages of cheques?
is a written order to pay a sum of money + fairly secure, - takes a few days for money to go into account, some places may not take them
66
What are the advantages and disadvantages of e-transfers?
+ payment is direct between accounts, easy to set up, instant - need to get numbers right or could go to the wrong person
67
What are the advantages and disadvantages of direct debit?
authorises third party payments + simple way to pay bills - may make it hard to plan expenditure, must have sufficient funds
68
What are the advantages and disadvantages of standing order?
is an instruction to make regular payments + payments do not change, able to plan expenditure, must have sufficient funds - automatic till cancelled,
69
What are the advantages and disadvantages of prepaid cards?
+ Widely accepted in retailers, can not spend more than amount on card - if lost or stolen cash is lost, may have transaction fees
70
What are the advantages and disadvantages of contactless cards?
+ fast easy secure, normally up to £30 but can go up to £100 - cardholder can lose track of how much they spend
71
What are the advantages and disadvantages of charge cards
+ high credit limit and other benefits - high fees and stricter on who can have one
72
What are the advantages and disadvantages of store cards?
+ only accpeted by the stores that issue it, may get loyalt discounts - could get interest and could overspend
73
What are the advantages and disadvantages of mobile banking?
+ on phone or tablet, can deposit cheques without a store, secure - limited service, may not get full range of services
74
What are the advantages and disadvantages of BACS and faster payment?
+ usually no fee, faster payment can take 2 hours - takes three days,
75
What are the advantages and disadvantages of CHAPS?
+ guaranteed same day transfer - charged a fee
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