Economic Impact on Personal Finances Topic 7

Economic Impact on Personal Finances The idea that your economic decisions affects others in the economy is known as? Interdependency, reliance, compliance “If a lot of people decide to save money, they will buy less goods, some businesses won’t have enough money to pay workers and they will have to make them redundant. This is interdependency.” True or false? Total personal debt in the UK is? £1.439 m £1.439 bn £1.439 tn How much does the average household debt? £14,472 £54,472 £84,472 What is the average household debt not including mortgages? £618 £6,018 £16,018 What is the average savings in the UK? £2,773 £12,773 £22,773 £122,773 What percentage of UK households have no savings at all? 5% 10% 20% 50% Managing your money correctly is known as? Money Management, fiscal Prudency Can borrowing money ever be seen as prudent money management? Yes or No Which 4 of these are good money management? Saving for the future, taking out a pension, using pay day loans, taking out a mortgage, maximising borrowing on credit cards, buying high risk shares, taking out insurance, spending all income Which of the following are our needs and which are our wants? Food, water, shelter, clothing, warmth, phone, car, holiday What is unique about an Islamic loan? They don’t exist, you don’t pay them back, there is no interest on them If a lot of people buy a particular good and the demand exceeds the supply, what will happen to its price? Increase, decrease If a good was very popular and in high demand and people went off it and demand dropped, what is said to have burst? Bubble, Balloon, Ball What is bad debt? Debt that individuals can never pay back or Debt with very high levels of interest on it If people make bad financial decisions and take out bad debt, this will have a detrimental affect on society. True or false What body checks the governments spending, borrowing & budget? Office for Budget Responsibility (OBR), Bank of England or Treasury If you didn’t have enough money to pay an urgent bill, what would be the responsible way to pay it? Pay day loan or using an overdraft Poor financial choices can also have a significant social impact, in terms of increased stress, health issues, marriage breakdown and even suicide. True or false? State whether the following are positive or negative for the economy: over borrowing, spending, high interest rates, rising prices, high level of saving, bad debt, balanced budget

Economic Impact on Personal Finances The idea that your economic decisions affects others in the economy is known as? Interdependency, reliance, compliance “If a lot of people decide to save money, they will buy less goods, some businesses won’t have enough money to pay workers and they will have to make them redundant. This is interdependency.” True or false? Total personal debt in the UK is? £1.439 m £1.439 bn £1.439 tn How much does the average household debt? £14,472 £54,472 £84,472 What is the average household debt not including mortgages? £618 £6,018 £16,018 What is the average savings in the UK? £2,773 £12,773 £22,773 £122,773 What percentage of UK households have no savings at all? 5% 10% 20% 50% Managing your money correctly is known as? Money Management, fiscal Prudency Can borrowing money ever be seen as prudent money management? Yes or No Which 4 of these are good money management? Saving for the future, taking out a pension, using pay day loans, taking out a mortgage, maximising borrowing on credit cards, buying high risk shares, taking out insurance, spending all income Which of the following are our needs and which are our wants? Food, water, shelter, clothing, warmth, phone, car, holiday What is unique about an Islamic loan? They don’t exist, you don’t pay them back, there is no interest on them If a lot of people buy a particular good and the demand exceeds the supply, what will happen to its price? Increase, decrease If a good was very popular and in high demand and people went off it and demand dropped, what is said to have burst? Bubble, Balloon, Ball What is bad debt? Debt that individuals can never pay back or Debt with very high levels of interest on it If people make bad financial decisions and take out bad debt, this will have a detrimental affect on society. True or false What body checks the governments spending, borrowing & budget? Office for Budget Responsibility (OBR), Bank of England or Treasury If you didn’t have enough money to pay an urgent bill, what would be the responsible way to pay it? Pay day loan or using an overdraft Poor financial choices can also have a significant social impact, in terms of increased stress, health issues, marriage breakdown and even suicide. True or false? State whether the following are positive or negative for the economy: over borrowing, spending, high interest rates, rising prices, high level of saving, bad debt, balanced budget Needs Wants Negative Positive Negative Negative Negative Negative Positive

Economic Impact on Personal Finances 1) If you can’t pay your debts, who else might it have a detrimental affect in society? Name as many a possible? 2) Both good and poor personal financial choices have particular effects on the economy and society. What are the main effects of good financial choices are: less ‘bad debt’ in the economy less borrowing overall increased spending and increased saving, because when people borrow less, they repay less from their earnings. 3) Poor financial decisions, on the other hand, can have the opposite effect: increased amounts of personal debt that cannot be repaid more high-risk borrowing (ie borrowing money that has high levels of interest or which cannot be paid back) less saving and less spending (because people use more of their earnings to repay expensive debt). 4) How each of us decides to manage our money depends on five areas: What are the five areas? our goals, values, responsibilities, priorities and financial constraints. What are your goals? If your goal was to own your own house, what financially would you have to do to achieve it? (save for a deposit and have a stable income that will allow you to take out a mortgage and make the monthly payments)

Financial Conduct Authority (FCA) – identified five components of financial capability or good financial management. What are they? 1. Staying within a budget – This is sometimes referred to as ‘making ends meet’ and means that you do not spend more than you get in income. 2. Keeping track of personal finance – Also known as ‘budgeting’, this means knowing how much income you have and how much your expenses are. 3. Planning ahead – This could mean saving money for emergencies or putting money aside to ensure that you have a stable income on retirement. 4. Choosing financial products wisely – This involves looking at interest rates and understanding the ‘small print’, ie whether there are any extra fees. 5. Staying informed about financial matters.

Economic Impact on Personal Finances The idea that your economic decisions affects others in the economy is known as? Interdependency, reliance, compliance “If a lot of people decide to save money, they will buy less goods, some businesses won’t have enough money to pay workers and they will have to make them redundant. This is interdependency.” True or false? Total personal debt in the UK is? £1.439 m £1.439 bn £1.439 tn How much does the average household debt? £14,472 £54,472 £84,472 What is the average household debt not including mortgages? £618 £6,018 £16,018 What is the average savings in the UK? £2,773 £12,773 £22,773 £122,773 What percentage of UK households have no savings at all? 5% 10% 20% 50% Managing your money correctly is known as? Money Management, fiscal Prudency Can borrowing money ever be seen as prudent money management? Yes or No Which 4 of these are good money management? Saving for the future, taking out a pension, using pay day loans, taking out a mortgage, maximising borrowing on credit cards, buying high risk shares, taking out insurance, spending all income Which of the following are our needs and which are our wants? Food, water, shelter, clothing, warmth, phone, car, holiday What is unique about an Islamic loan? They don’t exist, you don’t pay them back, there is no interest on them If a lot of people buy a particular good and the demand exceeds the supply, what will happen to its price? Increase, decrease If a good was very popular and in high demand and people went off it and demand dropped, what is said to have burst? Bubble, Balloon, Ball What is bad debt? Debt that individuals can never pay back or Debt with very high levels of interest on it If people make bad financial decisions and take out bad debt, this will have a detrimental affect on society. True or false What body checks the governments spending, borrowing & budget? Office for Budget Responsibility (OBR), Bank of England or Treasury If you didn’t have enough money to pay an urgent bill, what would be the responsible way to pay it? Pay day loan or using an overdraft Poor financial choices can also have a significant social impact, in terms of increased stress, health issues, marriage breakdown and even suicide. True or false? State whether the following are positive or negative for the economy: over borrowing, spending, high interest rates, rising prices, high level of saving, bad debt, balanced budget