personal finance

The function and role of money

unit of account

means of exchange

store value

legal tender

What is a unit of account?

a universably understandable show of value to compare the values of goods and services

What is means of exchange?

money allows goods and services to be traded with out bartering

store value

saving.assets can be used now or in the future

legal tender

legaly recognised payment backed by the goverment

how is the role money influenced

external influences and trends

culture-- some cultures/ religions/ethical values have rules around money

life events

life stages

intrest rates-- if intrest rates r high save more and borrow less

personal atitudes

y plan expenditure

avoid debt

avoid legal action and reposestion

remain solvent

good credit rating

avoid bankrupcy

manage money to fund purchases

generate income and savings

provide insurance againts loss or illness

inflation

a general increase in prices and fall in the purchasing value of money.

what is rpr cpr

both measure inflation but rpr includes housing costs

payment methods

cash

credit

debit

cheque

contactless

mobile banking

direct debit

standing order

electronic transfer

pre paid card

charge card

store card

BACS
CHAPS

The function and role of money

unit of account
means of exchange
store value
legal tender

What is a unit of account?

a universably understandable show of value to compare the values of goods and services

What is means of exchange?

money allows goods and services to be traded with out bartering

store value

saving.assets can be used now or in the future

legal tender

legaly recognised payment backed by the goverment

how is the role money influenced

external influences and trends
culture-- some cultures/ religions/ethical values have rules around money
life events
life stages
intrest rates-- if intrest rates r high save more and borrow less
personal attitudes

y plan expenditure

avoid debt
avoid legal action and reposestion
remain solvent
good credit rating
avoid bankruptcy
manage money to fund purchases
gernerate income and saving
provide insurence against loss or illness

inflation

a general increase in prices and fall in the purchasing value of money.

what is rpr cpr

both measure inflation but rpr includes housing costs

payment methods

cash
credit
debit
cheque
contactless
mobile banking
direct debit
standing order
electronic tranfer
pre paid card
charge card
store card
BACS
CHAPS

y plan expenditure

avoid getting into debt
control costs
avoid legal action and reposesion
remian solvent
good credit rating
avoid bankrupsy
managing money to fund purchases
gernerate income and savings
insurance against loss or illness

types of customer protection

- financial conduct authority
- financial ombudsman service
- financial service compensation scheme
- legislation

what is the financial conduct authority

- regulates conduct of the financial service industry in the uk
suspend/stops individuals or firms from partaking in regulated activities
- issue fine of those who break the laws
- focus on 3 areas: authorisation, supervision and enforcement

what is the financial ombudsman service

- settles complaints between customers and financial businesses
- apointed by the goverment
- funded by compusory fees charged to all regulated financial institutions

financial service compensation scheme

- that protects savers and compensates them if thier savings provider ceases trading and is unable to return

legislation

- protects info collected by agencies
- laws passed to regulate any business offering credit to customers

pros and cons of customer protection

pros - protects customers form loses and exploitation
cons - could get rid of too many firms can result in a less competitve market that can subsequently charge higher than they previously did

what are the types of borrowing

overdraft
personal loan
hire purchase
mortgages
credit card
payday loan

what is an overdraft

- borrow money thru ur overdraft to
- ads: only borrow what u need,
no intrest if payed in full
- disads: intrest if not payed back,
overdraft is only a limted amount

what is a personal loan

- borrow money for a specific thing usualy over a longer period of time
- ads: borrow money over a longer period i time
- disads: intrest costs,
fees,
debt accumilation

What is hire purchase

- buy an asset in regular instalments the buyer pays of the total + intrest then they get to keep the asset
- ads: flexible repayment terms/ early repayment.
approval less dependant on credit score
- disads: intrest.
missed payments effect credit score

what are mortgages

- long term loan secured against an assets
- ads: borrow alot of money over a long time
- disads: long term big commitment

what r credit cards

- loan thru the back. either need t pay the minimum or full debt each month
- ads: flexible and can be done thru ur back.
no intrest if u pay in full
- disads: intrest if u only pay the minimum
debt accumilation

what r payday loans

- very short term loan with very high intrest
- ads: helps with bills that need to be payed immediately
- disads: very high intrest.
debt accumilation.
snowball

what r the types of accounts

basic
standard
student
premuim/package

what is a basic account

people with bad credit/ bankruptsy
no over draft

what is a standard account

comes with a debit card and maybe an arranged overdraft and cheque book
no monthly maitenance fees
low intrest

what is a student account

a standard account with lower/ no intrest on overdraft
however smaller overdraft amount

what is a premuim/ package account

perks like insurance, acess to concerge , discount on mortgages or other accosiated products
inbetween normal payed-for accounts and privet banking
have to pay a fee

what r the types of insurance

car
home and contents
life
travel
pet
health

car insurance

- is a legal requirement
- typical cover r 3rd party fine,theft and fully comprehensive
- ads: covers expensive damages
- disads: expensive.
need it for the law

home and contents

- building insurance is for the building itself
- contets insurence if for the possesions with in the home or in some cases a possesion that is not always in the home eg a laptop
- ads: covers against fire, damage and theft.
covers and item even if its not in the home
- disads: increasing prices.
renewing it means price inscrease
could be needed for a mortgage

life insurance

- lump sum upon death
- usualy required for getting a mortage to ensure its covered
- ads: covers incase of death
financial protection
- disads: costly with premium
expensive
could be needed for a mortgage

travel insurance

- protects u whilst ur abroad
- ads: covers alot of espects
can be inexpensive
- disads: have to pre plan
can also be expensive

pet insurance

- protects from expenses accociated with pets
- ads: covers against expensive bills
- disads: u have to pay for some cover u will not use
doesn't cover alot of illnesses
expensive

health insurance

- covers individuals, families and employees via payment plan
- ads: quicker wait time for apointments and refreals
greater control over choices
- disads: very expensive
might not cover some conditions

Types of Financial Institutions

Bank of England
Banks
Building Societies
Credit Unions
National Savings and Investments
Insurance Companies
Pension Companies
Pawnbrokers
Payday Loans

bank of england

- uks central bank that ensures financial stability of the uk
- sets intrest rates
- prints bank notes
- stores 400,000 gold bars
- doesnt deal with gernaral publc
- ads:protects the financial stability of the uk economy
lends to banks
sets intrest rates
- disads: dont lend to public
high intrest rates making borrowing more expensive

bank

- handles fiancial matters and stores money on behalf of the public
- ads: secure to store money
pays intrest on saving
varieties of sevices
- disads: savings only protected to £85,000
owned by share holders so r designed to make profit

building society

- similar to banks by providing same financial services
- the society is owned by members which means they can set rates to benifit members not share holders
- ads: owned by members
variety of services
pay intrest on savings
secure place to store money
- disads: lacks business drive when compared to banks as they arn't profit driven
savings only protected to £85,000

Credit Union

- member owned financial coopirative controled thru members and operated on the princibles of helping people, providing members credit at a competitive as well as other financial services
- ads: owned by members
varieties of service
additional benifits to communities and charities
- disads: may lock the drive of the commercial banks as they arnt profit driven
savings protected to £85,000

national savings and investment

- goverment backed organisations that offer secure saving options
- ISAs premium bonds and gilts
- ads: savings r secure
various ways to spend (premuim bonds)
- disads: variable rates
lack of high speed presents
usualy need to notice on withdrawals

insurance companys

- protects people against loss for monthly payments
- ads: protects against unexpected events
variety of cover
pay monthly easier to budget
- disads: premuim based on risk high risk high premuim
owned by shareholders so need to make profit

pension companys

- sell pension policies
- usualy invest the money deposited in hopes of growing it for use
- ads: plan for retirement
match contributions of employer
tax benafits
- disads: poor investments decisions means poor return on investments
cant access money until agreed term

pawn brokers

- loan money to people and secure it against an asset
- if the item isn't returened they will sell the asset to recoup the cost of the loan
- ads: quick way of getting short term cash
no intrest
buy back pawned asset
- disads: amount given for the asset is less than actual value
asset will be sold if its not payed

payday loan

- short term high intrest
- ads: quick way to get short term cash
- disads: high intrest
debt accumilation

methods of communicating with customers

- Branch
- Online banking
- Telephone banking
- Mobile banking
- Postal banking

branch communication

- physical place
- face to face advice or self serving
- ads: in person / trusted / personable
build relationships
brand loyalty
other services
immediate transactions
-disads: limmited opening times
long and effort
travel and costs accosiated

online communication

- manage banking needs online
- ads:24/7 access
no travel
privet
- disads:less personable
needs the internet/knowledge
cash cannot be given in /out
cyber security

telephone communication

- manage banking needs over the phone
- ads:to automate bills
may speak to a advisor
no additional charges
- disads: cash cannot be given in or out
limited open hours
can be automated
limited services
fraud and identity theft

mobile communication

- manage banking needs on the mobile phone
-ads: 24/7 acess
conveniant
- disads: cash cannot be given in/out
dowload app
lose ur phone
hacking

postal communication

- paper copies of statments
- some still pay bills via cheque
- ads:traditional
no technology required
- disads: long
could get lost