Financial Management Flashcards
(25 cards)
Legal consequences of of poor financial management?
May face bankruptcy
What are financial consequences of poor financial management?
- goods or assets repossessed
- wages taken away
What is a creditor?
A Leander
What is a deptor?
A borrower
What is a garentor?
Someone who garentees to pay the money back if the borrower does not.
Steps to a budget:
1 calculate total income
2 record your expenses
3 total your expenses
4 compare your income with expenditure - do you have enough?
5 asses financial position - make modifications
What is the goal of a wise consumer?
Getting the greatest satisfaction from their money in the long and short term
A plan of how to use/save your money :
Budget
Income:
The money a person earns.
Cost that you pay/ money you spent:
Expenditure
4 steps to take when getting a loan
- decide how much you need to borrow
- decide if you have enough savings for a deposit
- endure your income is enough to meet your loan repayment
- shop around and compare loans
Interest
Payment made for use of money that has been borrowed
Why do lenders charge interest?
- to make money from their money lending services
- to account for risk
Lower risk : ?
Lower interest
Secured personal loan
Loan secured by asset (car/house)
Unsecure personal loan
Loan not secured by assed (holiday)
Mortgage loan
Very long term secure loan on real estate
Bank overdraft
Negative savings account
Credit cards
Credit limit. Interest charged on amount used
Store credit
Low limits easy to aquire
Cash advances
Receive your next pay early
What are the three Cs of credit rating
Character- have you payed your bills on time?
Capacity- how much dept do you currently have? How much income do you earn?
Collateral- what assets do you currently have?
What is your ability to repay based on?
- what you earn
- what you owe
- what you own
Reasons for borrowing money
Convenient
Emergencies
Possible savings
