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Personal Finance (Business) > Functions and Role of Money > Flashcards

Functions and Role of Money Flashcards

1
Q

Unit of Account

A

Allows a monetary value to be placed on goods & services

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2
Q

Means of Exchange

A

Enables businesses to trade with other businesses and customers

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3
Q

Store of Value

A

Allows businesses and customers to use it in the future as it keeps value

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4
Q

Legal Tender

A

Method of payment - allows us to pay later

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5
Q

Personal Attitudes

A

Depends on family’s attitudes or your own attitudes.

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6
Q

Life Stages

A

Childhood, adolescence, young adult, middle age & old age

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7
Q

Culture

A

Different cultures, affected by tradition, religion and ethical beliefs, will have different attitudes to money.

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8
Q

Life Events

A
  • Within your control, for example going to university, travelling abroad, getting married or starting a family.
  • Outside your control, for example illness, financial gains or losses.
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9
Q

External Influences

A

Factors outside your control, including the state of the economy, will have an impact

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10
Q

Interest Rates

A

The cost of borrowing money or the reward for saving money

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11
Q

How does interest rates impact the role of money?

A

Low interest rates - may be more willing to borrow money or spend on Credit
High Interest Rates - there is more of an incentive to save.

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12
Q

Which life stage does this refer to?

Financial Needs/Implications?

  • Limited needs
  • Mainly reliant on parents
  • May want to buy sweets or toys
A

Childhood - Financial Needs

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13
Q

Which life stage does this refer to?

Financial Needs/Implications?

  • Money received from presents may be spent as attitude will be that this is to buy things you want
  • May be encouraged to save or parents or grandparents may set up a savings account for you into which they make regular payments
  • May rely on pocket money
A

Childhood - Implications

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14
Q

Which life stage does this refer to?

Financial Needs/Implications?

• Want to be more independent
• Slightly less reliant on parents as want to
socialise away from family

A

Adolescence - Financial Needs

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15
Q

Which life stage does this refer to?

Financial Needs/Implications?

  • May look for a part-time job
  • Still partially reliant on pocket money
  • More likely to receive cash as gifts and may be willing to save up smaller amounts in order to make bigger purchases
A

Adolescence - Implications

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16
Q

Which life stage does this refer to?

Financial Needs/Implications?

• University or starting a career
• Looking to be more independent
• Buying a car and buying or renting a flat or
house
• Looking to settle down and maybe get
married or start a family
A

Young adult - Financial Needs

17
Q

Which life stage does this refer to?

Financial Needs/Implications?

• May take a student loan if going to university
• Borrow money to pay for a car or purchase one on a
finance deal
• May be looking at taking out a mortgage
• Need to earn money to support self and others
• Eligible for credit and debit cards

A

Young adult - Implications

18
Q

Which life stage does this refer to?

Financial Needs/Implications?

• Support family
• Start saving for children’s futures, e.g.
university, weddings, etc.
• Look to improve own lifestyle, e.g. new car or
move house
• Enjoy having access to additional money to
spend on luxuries such as foreign holidays

A

Middle age - Financial Needs

19
Q

Which life stage does this refer to?

Financial Needs/Implications?

• Savings accounts for specific purposes
• Paying a mortgage
• Planning for own future through pensions and retirement plans
• Likely to be the stage of life when income peaks but
matched with high expenditure

A

Middle age - Implications

20
Q

Which life stage does this refer to?

Financial Needs/Implications?

• Fewer dependents
• May downsize, e.g. move from family home
to a smaller retirement home
• Fewer financial needs for assets but may be
higher for services such as health care

A

Old age - Financial Needs

21
Q

Which life stage does this refer to?

Financial Needs/Implications?

  • Mortgage payments stop or become lower
  • Less income as reliant on a pension rather than a salary
A

Old age - Implications

22
Q

State two IMPLICATIONS of a YOUNG ADULT

A

Either two from:
• May take a student loan if going to university
• Borrow money to pay for a car or purchase one on a
finance deal
• May be looking at taking out a mortgage
• Need to earn money to support self and others
• Eligible for credit and debit cards

23
Q

State two FINANCIAL NEEDS of MIDDLE AGE

A

Either two from:
• Support family
• Start saving for children’s futures, e.g.
university, weddings, etc.
• Look to improve own lifestyle, e.g. new car or
move house
• Enjoy having access to additional money to
spend on luxuries such as foreign holidays

24
Q

What is Debt?

A

Money owed

25
Q

What is a Credit rating?

A

A score given to individuals on how likely they are to repay debts based upon their previous actions.

26
Q

What does the term Bankrupt mean?

A

When an individual or organisation legally states its inability to repay debts.

27
Q

What does the term Solvent mean?

A

The ability to meet day-to-day expenditure and

repay debts.

Personal Finance (Business) (7 decks)

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