What are savings?
The part of our income that we don’t spend.
Why do people save?
Peopel save to…
- Purchase something in the future like a house.
- Have money available for unexpected bills like repairing a fridge.
- Pay for an event in the future like a wedding.
Where can people save?
A Financial Institution.
Why do people save in a Financial Institution?
- No risk to the account owner of theft so it is safer.
- Interest is earned on the savings in finantial institutions.
- Access to the money is easier and more convenient.
What are the types of Financial Institutions?
Commercial Banks, Credit Unions, An Post.
What is a commercial bank?
A business that provides financial services to personal and business customers. (Bank of Ireland and Ulster Bank)
What is a Credit Union?
A co-operative organisation where a group of people save together and lend to each pther at a fair and reasonable rate of interest. (Killarney Credit Union)
What is An Post?
A post office network throughout Ireland that also offers a number of savings options to members of the public like prize bonds, deposit accounts or smart current accounts.
What is interest on savings?
The return you receive from a financial institution for saving your money with them.
How is interest calculated?
It is calculated in Simple and Compound interest.
What is Simple interest?
The interest you receive is calculated as a percentage of the amount of money you have put into the account.
What is Compund intersest?
The interest you receive is calculated as a percentage of the total amount in the account at the end of each year.
What is the Annual Equivalent Rate (AER)?
The true rate of interest over a period of time, as it takes into account the interest that has already been added to your savings.
What are the factors people should consider before investing?
- How much money they could make on their investment.
- Is there any risk with this investment.
- How easy is it to turn our investment back into cash if we need to quickly.
- How much will we have to invest and can we afford this?
What is Bitcoin?
A digital or virtual currency that isn’t controlled ny any central bank.
What is borrowing?
When someone takes money from someone with the intention of returning it during an agreed amount of time.
What are reasons for borrowing money?
- To make an expensive purchase now by spreading the payments over an agreed period of time.
- To fulfil your needs or wants without leaving yourself shortof money for day to day expenses.
- To start a new business and purchase the premises, equipment and stock that you need.
What are questions to ask before borrowing?
- Do we really need the item we are thinking of purchasing?
- Do we need the item now or can we wait until we have saved the money ourselves?
- Can we raise the money without borrowing?
Where can we borrow from?
Commercial banks, Credit unions, Moneylenders.
