business learning aim A
how is the role of money influenced
life stages
culture
life events
intrest rates
defenition of legal tender
a legally recognised form of payment.
defentition of unit of account
something that can be used to value goods and services (price)
name the four functions of money
unit of account
means of exchange
store of value
legal tender
defenition of means of exchange
something that allows goods and services to be traded without the need of a barter system
defenition of store of value
any assests whose 'value' can be used now or used at a later date
life stages are...
childhood, adolescence, young adult, middle age, and old age
childhood financial needs & implications
FN- limited needs, reliant on parents, purchase sweets & toys.
I- pocket money from parents, spent on non-essentials, encouraged to save.
adolenscence financial needs & implications
FN- want independence, less reliant on family, start socialising away from home.
I- main money from parents, may look for a job, cash as gifts + save for larger purchases.
young adults financial needs & implications
FN- university/early career, more independent, renting/buying cars or homes, starting a family/getting married.
I- student loans, job & mortgage, eligible for credit cards.
middle age financials needs & implications
FN- support family, improve lifestyle, save for the fututre.
I- paying mortgage, paying pension, high income & expenses.
old age financial needs & implications
FN- fewer dependence, fewer financial needs, may downsize.
I- no mortgage payments, income from a pension no salary.
defenition of debt
money owned to someone else
defenition for bankrupt
when an individual or organisation legally states its inability to repay debts.
defenition of solevnt
the ability to meet day to day expenditures and repay debts.
why plan expenditures
maintain good credit rating
avoid falling into debt
avoid legal action
avoid bankruptsy
what does BACS stand for
banks automated clearing service
what does CHAPS stand for
clearing house automated payment system
True or False: CHAPS payments are guaranteed to arrive on the day they were made if made between certain hours
TRUE
Usually how long does BACS payments take to clear?
3 days
whats a current account?
A type of bank account that keeps your money secure and helps you manage your finances.
types of current accounts
standard
basic
premium
student
basic account features
-used by people with poor credit ratings
-no overdraft available
premium account features
-monthly fees
-additional benefits e.g.
breakdown cover, cashback on purchases, insurence
standard account features
-recieve a debit card
-standard features
student account features
-benefits students
-intrest free overdrafts
-railcards or discounts
definition of hire purchase + pros and cons
where the borrower agrees to purchase an asset in regular instalments.
pros: you can spread the cost over a fixed term, intrest rate doesnt change.
cons: monthly payments are based on credit score, costs more overall.
overdraft defenition + pros and cons
borrowing money that you dont have through your current account.
pros: immediate access to extra funds if needed
cons: intrest is charged
personal loans defenition + pros and cons
borrowing a set amount of money for amspecific reason
pros: cost is clear up front, anle to borrow bigger amounts than a credit card
cons: possible fees/penalties that can drive up the cost of borrowing.
mortgage defenition + pros and cons
a long term loan to fund the purchase of an asset, usually paid back over a long period of time.
pros: your remain the legal owner of your property, usually easily approved.
cons: if you cant keep up with payments you endup losing your asset.
credit card defenition + pros and cons
a type of loan where the money you spend is actually borrowed from the card provider.
pros: helps you build a credit history, protection against fraud.
cons: intrest is charged, easy to overspend, there are late fees.
payday loans defenition + pros and cons
a short term source of finance with very high intrest fees, usually only used in emergancies.
pros: quick access to funds, an eassy application and approval process
cons: steep intrest rates, short repayment periods, doesnt help build your credit.
ISA individual savings account (savings)
-offers tax free intrest
-tends to be a limit
-you can only have one active ISA
deposit account (savings)
-somewhere you can put your money so it can grow in value
-has an intrest rate
premium bonds (investment)
PB are investment product issued by national savings and investment.
-monthly price draw where you can earn between £25-£1million
-tax free
-the money you put in is secure
shares (investment)
gives your part ownership of a business which allows you to benefit from their success in form of payment (diveidents)
-value of share can go up or down + you can sell these shares
pension
-you pay into a scheme where youll earn back money later on once you retire.
-you earn intrest on it
savings pros and cons
pros: low risk, secure, allows peace of mind, intrest payments
cons: inflation can impact intrest rates + the likelihood of you spending or saving
investment pros and cons
pros: potential of earning back more than you invest, much higher rate of return compared to savings, opportunities
cons: some/all investment can be lost, no garantee of return
name the types of insurence
car
life
home
travel
pet
health