Personal and Business finance

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  • Created by: Aviation
  • Created on: 06-04-17 14:17
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  • Topic A - Managing Personal Finance
    • Barter
      • D: An agreement to trade goods or services for other goods or services
        • 1.Finding someone that wants what you have to offer.             2.Long trading chain 3.products can expire or are seasonal 4.harder to divide or gain an exact value of worth (e.g chicken worth loads to you but nothing to me)
    • Bank
      • D: A firm that collects and stores money from customers. Also provides money to people that need it and gets money from people that provide it.
        • 1.Charges interest on lending money, interest on loans    2.pays interest to savers  3.Bank gains a profit from from higher interest on loans = higher inflow than outflow
    • Methods of Payment
      • Debit Card= Money taken from current account
        • No carry cash
          • No overspend
        • Credit Card= Delay and spread payment over period of time
          • 1.Protection on purchase 2.Spread cost = cash-flow management 3.Interest free periods
            • 1.Overspend 2.Interest Charged after free period
          • Prepaid card= Money uploaded on card
            • Set Budget = No overspending
              • 1.Free to setup        2.If stolen cant get money back
            • Contactless=No pin, touch card
              • 1.Easy to use 2. No carry cash
                • 1. Limited stores have available 2.Limit on amount to take 3.People can steal easier
              • Charge Card = Delay payment for short period
                • Short period credit gained
                  • 1.Must pay full balance each month 2.Annual fixed fee
                • Store card = Issued by retail store, delay payments
                  • 1.Short period credit which is interest free 2.Store loyalty and discount
                    • 1.Only can use in the store gained from 2.Interest charged on outstanding balance
                  • Electronic Transfer = Transfer from one bank account to another
                    • 1.Instant transfer 2.Recorded transfer     3.No additional fee
                      • 1.Risk of loss if not properly setup
                    • BACS (Bankers automated clearing service) = Transfer to another account
                      • 1.Easy access 2.No charge on transfer amount
                        • 1.limited transfer amount
                      • CHAPS (Clearing house automated payment) = Transfer large amount to another account
                        • 1.Same day transfer   2.Can set time to be received. 3.No limit, for large transfer sum
                          • Fixed charge on the transfer
                        • Mobile banking= Financial transactions on mobiles
                          • used anytime at anyplace
                            • limited features - internet banking offers more
                          • Cheque = Written order for certain payment to be transfered
                            • 1. Low fraud risk        2.Exact amount
                              • 1.Bank can refuse           2.slow and old fashioned 3.can loose
                            • Direct Debit = Third party withdraw from account (any amount)
                              • 1.Easy to make regular payment 2.varied amount
                                • 1.mistakes = have to watch and sort 2.harder to budget
                              • Standing order = Third part withdraw from account (fixed amount)
                                • 1.Same amount 2.Easier to budget   3.can't withdraw more than fixed amount
                                  • Can lead to overdraft required, payments continue even if limited money available
    • Borrowing Methods
    • Insurance
  • D: An agreement to trade goods or services for other goods or services
    • 1.Finding someone that wants what you have to offer.             2.Long trading chain 3.products can expire or are seasonal 4.harder to divide or gain an exact value of worth (e.g chicken worth loads to you but nothing to me)
  • Blue= Definition
  • Green= Positive
  • Red=Negative
  • Yellow= Topic
  • Orange = Purpose/ Features
  • Interest Rate= % increase      Interest amount=the amount the interest is worth.
  • Overdraft = withdraw money that is not available in current account
    • 1. interest charge over limit        2.solve short term cashflow
      • 1. High interest     2.overspend
  • Hire purchase = use item while paying instalments
    • 1. spread expensive cost 2.can afford expensive items
      • 1. High interest  2.may cost more
  • Payday loan = bridging gap between now and next working wage
    • 1. solves short-term cash flow problems 2.replace overdraft if cant get
      • 1. VERY high interest
  • ISA (Individual savings accounts) = Saving account where income not charged
    • 1. No tax charged on income    2.higher interest than other savings
      • 1. notice before withdrawals 2.Limit on withdraw
  • Deposit and savings account = interest on positive balance
    • 1. regular deposit of set amount = easier to manage
      • 1.interest earned is taxed 2.interest lost if borrow too much
  • Premium bonds - Government scheme of loterry
    • 1. more can be earned than other saving methods 2.easy to withdraw with no loss
      • 1. no guaranteed return 2.amount decrease by inflation
  • Bonds and gilts = investing in company or government to gain interest for a period of time
    • 1.regular fixed returns 2.spread risk over range of markets
      • 1.risking of losing all money
  • Shares= investing in business and gaining % of profit
    • 1. can offer high returns 2.additional benefit e.g shareholder business discount
      • 1. investment risk of loss
  • Car insurance= legal requirement to cover car
    • 1. meets legal requirement  2.protects against damage and theft
      • 1. can be expensive especially new drivers
  • Life insurance= having insurance for life for a certain period of time Life assurance is a set it for a longer fixed amount of time where the money invested will bring a returns
    • 1. provides family peace
      • 1.costly     2.The person doesn't die no money gained from insurance
  • Travel insurance= covering protection when on holiday
    • 1. Protect items and health
      • 1.cost more if more dangerous place
  • Pet insurance= health insurance for pets
    • 1. avoids expensive fees 2.ensures rapid medical attention
      • 1.additional cost for older dogs
  • Health insurance = covering cost for medical expenses
    • 1. quicker treatment 2.no worry about expensive cost
      • 1. more expensive for people with unhealthy life styles

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