loa Flashcards
(26 cards)
What are the four functions of money?
Unit of account: Helps compare the value of items.
Means of exchange: Enables trade without barter.
Store of value: Retains value for future use.
Legal tender: Official money backed by the government.
What are the advantages and disadvantages of using money as a store of value?
Advantage: Can be saved and used in the future.
Disadvantage: Inflation can reduce its value over time.
How do personal attitudes influence financial behavior?
Risk, reward, borrowing, and saving can affect how people manage money.
How do external influences like interest rates affect financial decisions?
Low interest rates: Good for borrowing, bad for saving.
High interest rates: Good for saving, bad for borrowing.
What are the advantages of planning expenditure?
Avoids debt.
Maintains a good credit rating.
Provides insurance against unexpected expenses.
What are the disadvantages of poor financial planning?
Risk of bankruptcy.
Difficulty in borrowing money.
Legal issues or repossession of assets.
Why is a good credit rating important?
Makes it easier to borrow money when needed.
Shows financial responsibility to lenders.
What are the advantages of financial planning for savings and investments?
Generates additional income.
Counters the effects of inflation.
Helps achieve financial goals.
What are the disadvantages of not saving or investing?
Limited ability to handle emergencies.
Missed opportunities for wealth growth.
What are the advantages and disadvantages of cash as a payment method?
Advantages: Widely accepted, no additional fees.
Disadvantages: Risk of loss or theft, no online use.
What are the advantages and disadvantages of debit cards?
Advantages: Easy to use, no debt risk.
Disadvantages: Can cause overspending .
What are the advantages and disadvantages of credit cards?
Advantages: Can delay payments, builds credit score.
Disadvantages: High-interest rates if not paid on time.
What are the advantages and disadvantages of electronic transfers?
Advantages: Fast, secure, paperless.
Disadvantages: Requires internet access, possible fraud risk.
What are the advantages and disadvantages of standing orders?
Advantages: Automated regular payments.
Disadvantages: Fixed amount; cannot adjust for varying bills.
What are the advantages and disadvantages of a standard current account?
Advantages: Easy access to funds, online payments.
Disadvantages: May charge fees for overdrafts.
What are the advantages and disadvantages of a premium current account?
Advantages: Offers benefits like insurance and cashback.
Disadvantages: Monthly fees may not always be worth it.
What are the advantages and disadvantages of a student account?
Advantages: Interest-free overdrafts, discounts.
Disadvantages: Overdraft limits may lead to overspending.
What are the advantages and disadvantages of using an overdraft?
Advantages: Flexible, good for short-term needs.
Disadvantages: High fees if exceeded.
What are the advantages and disadvantages of a personal loan?
Advantages: Fixed repayments, lower interest than credit cards.
Disadvantages: Must commit to repayments even if circumstances change.
What are the advantages and disadvantages of payday loans?
Advantages: Quick and easy access to cash.
Disadvantages: Extremely high-interest rates, risk of debt cycle.
What are the advantages and disadvantages of investing in shares?
Advantages: Potential for high returns, dividends.
Disadvantages: High risk, value can fluctuate.
What are the advantages and disadvantages of ISAs?
Advantages: Tax-free interest, multiple types available.
Disadvantages: Contribution limits.
What are the advantages and disadvantages of bonds?
Advantages: Low risk, regular interest payments.
Disadvantages: Risk losing all money if bond fails.
What are the advantages and disadvantages of life insurance?
Advantages: Financial security for dependents.
Disadvantages: Can be expensive over time.
