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Personal Finance - Coggle Diagram

- - - - Allows goods and services to be exchanged without double coincidence of wants.
        It allows us to trade
        Businesses and customers can buy and sell goods and services using money, for example when you purchased your lunch yesterday or paid to go to the cinema
    - - Comparing the value one good or service against another.
        It allows us to place a monetary value on goods and services
        The price of goods and services show the unit of account, for example a chocolate bar is 60p or a new car £30,000
    - - Money has to be worth something all the time.
        It allows us to use it in the future as it keeps it value
        You might have money saved in your ‘piggy bank’ which you can then use to buy goods and services in the future
    - - It is a legally recognised form of payment
        Money is widely recognised and used for all sorts of transactions from buying an ice cream or getting a haircut to paying a deposit on a house and receiving your wages
  - - - money is given their value through trust
    - - Hologram
      - Metallic Thread
      - Watermarks
  - - - The interest rate represents the cost of borrowing money or the amount a saver receives in interest. Usually stated as a percentage
  - - - Reliant on parents
      - Pocket money for sweets and toys
      - Savings account set up by parents
      - Relatives save money
    - - Wanting to be more independant
      - Slightly less reliant on parents
      - Possibly look for a part time job
      - More likely to receive cash as gifts
      - Partly reliant on pocket money
    - - University
      - Staring a career
      - Looking for more independance
      - Buying a car
      - Buying/ renting a house
      - Getting married
      - Having children
      - Taking out a student loan
      - Borrowing money to be able to pay for expenses
    - - Supporting family
      - Saving for children's future
      - Improving lifestyle (moving house or buying a new car)
      - Saving accounts
      - Paying for mortgage
      - Retirement plans
    - - Fewer dependances
      - Healthcare
      - Less income
      - Reliant on pension
      - Saving for grandchildren
  - - - Overspend
      - Borrowing Products (Loans)
      - Bankruptcy (bad credit score)
    - - Mortgage
      - Job (Salary)
      - Emergency fund
  - - - Impact wages
      - Availability of jobs
      - Prices of goods and services
    - - Amount of Tax
      - Amount received in benefits
  - - - Salary
        
        Gifts
      - Wages
      - Bonuses
      - Inheritance
      - Pension
    - - (Money you have to spend)
      - Mortgage/ Rent
      - Gas, Electricity, Water Bills
      - Home/ Car insurance
      - Health insurance
    - - (Adjustable items in budget)
      - Food
      - Petrol
      - Phone bill
      - Holidays
      - Membership
    - - (Money put aside for future)
      - Savings account
      - Joint account
      - Save for deposit and house
      - Savings generate future income from interest payments
        
        Helps provide a safety net to provide insurance against loss, injury or redundancy
        
        Can be used to fund future purchases such as a car or deposit for a house
    - - Create safety net
      - Prevents bankruptcy
      - Avoid overspending
    - - Inflexibility
      - Time consuming
      - Potential for conflict
    - - Set financial targets and goals
      - Generate income and saving
      - Manage money to fund purchases
      - Avoid bankruptcy
      - Maintain a good credit rating
      - Avoid getting into debts
      - Control costs
- - - - Food
      - Clothing
      - Insurance (car)
      - Rent
    - - Phone
      - Designer clothing
      - Basic car
    - - Holidays
      - House
      - Cars
- - - - Notes and coins in a wide range of denominations
      - Advantages
        
        Most widely accepted form of exchange
        
        Physical not virtual
        
        Consumers feel confidence when using
        
        Makes budgeting easier
      - Disadvantages
        
        Can be lost of stolen
        
        Threat of counterfeit
        
        Only really appropriate on purchases up to a certain amount
        
        Cannot be used online
    - - Issued by banks with payments for goods and services being deducted directly from a current account
      - Advantages
        
        No need to carry cash
        
        Secure method of payment with low risk of theft
        
        Widely accepted
        
        Offers a degree of protection on purchases
        
        Suitable for online transactions
      - Disadvantages
        
        Short time lapse between making the transaction and the money being withdrawn from the customers account
        
        May result in overspending
        
        Not accepted or appropriate for small transactions
    - - Issued by financial institutions allowing customers to delay payments for goods and services
      - Advantages
        
        Allows a period of credit that is interest free, e.g. one month
        
        Most cards are widely accepted
        
        Loyalty schemes are often offered e.g. collect points or cash back
        
        Offers a degree of protection on purchases
        
        Suitable for online transactions
      - Disadvantages
        
        Interest is charged on balances not paid off within a month
        
        Can encourage a customer to overspend and get into debt
        
        Interest is charged on cash withdrawals
        
        A limit will be set on the amount of credit allowed
    - - A written order to a bank to make a payment for a specific amount of money from one person’s account to another account
      - Advantages
        
        Low risk form of payment as the cheque can only be cashed by the named payee
        
        Widely accepted for face-to-face and postal transactions
        
        No need to provide change as can be written for an exact amount
      - Disadvantages
        
        Expensive for the consumer if the bank refuses to clear the cheque i.e. it bounces.
        
        The time delay between writing the cheque and it being cashed could cause a consumer to go overdrawn
        
        Viewed as old fashioned
        
        Easy for the consumer to make errors when writing the cheque which will create problems for both the consumer and the recipient
    - - Payment is transferred directly from one bank account to another
      - Advantages
        
        Almost instantaneous
        
        Provides a record of payment
        
        No additional costs incurred
        
        Easy to use for one-off and more frequent transactions
      - Disadvantages
        
        Risk of loss if the transfer is incorrectly set up
        
        Not appropriate for face- to-face transactions
    - - Advantages
        
        An easy way to make regular payments e.g. utility bills
        
        Amount paid can vary to ensure the payment matches the amount required by the vendor
        
        Quick and easy to set up
      - Disadvantages
        
        If the payer makes a mistake and takes too much it is the payee’s responsibility to claim back the money
        
        The payer determines the amount paid each time making it difficult for the payee to plan and budget
      - An agreement made with a bank allowing a third party to withdraw money from an account on a set day to pay for goods/services e.g. pay a gas bill
    - - An agreement made with a bank to transfer a fixed sum of money to a third party account on a set date on a regular basis e.g. pay £30 for a phone contract each month
      - Advantages
        
        The same amount is paid each time making it easier for the payee to plan and budget
        
        Easy for both to set up and to cancel
        
        No need to remember to make regular standard payments
      - Disadvantages
        
        Payments are taken regardless of the customer’s balance which could lead to the unplanned use of an overdraft facility
        
        Payments will continue to be made unless cancelled
    - - Money is uploaded onto a card with transactions then being withdrawn to reduce the balance
      - Advantages
        
        Can set a budget in advance to avoid overspending
        
        If lost or stolen the loss is limited to the remaining balance
        
        An effective way of controlling the amount spent by children and where the money is spent, e.g. upload money for school lunches or transport
      - Disadvantages
        
        Sometimes requires an initial fee to purchase or set up the card e.g. Oyster travelcard
        
        No protection if lost
    - - Cards containing antennae allow money to be transferred when the card touches a contactless terminal
      - Advantages
        
        Gaining in popularity
        
        Secure method of making payments
      - Disadvantages
        
        Often only accepted for relatively small transactions
        
        Still not widely accepted as seen as new technology
        
        Errors can happen, e.g. being charged twice if card tapped twice by mistake, therefore must check your receipt
    - - Charge cards are similar to credit cards, but they work in a different way.
        Although you can spend on a charge card in just the same way as a credit card, they differ because you must pay off your card balance in full every single month. You cannot carry over a balance from month to month.
      - Advantages
        
        Reduces risk of running up debts
        
        Allows a short period of credit
        
        Avoids the need to carry cash
        
        Often offers additional perks
      - Disadvantages
        
        Must be paid in full each month
        
        Often an annual fixed fee is applied
    - - Issued by a retail outlet so that customers can delay payments for goods/services (similar to credit cards but only accepted in specified stores)
      - Advantages
        
        Allows a short period of credit that is interest free e.g. one month
        
        Often offer loyalty schemes, discounts and special promotions or privileges
      - Disadvantages
        
        Only accepted in issuing store or links associations
        
        Interest is paid on outstanding balances
        
        Can encourage overspending and result in the customer getting into debt- particularly if they hold multiple cards
    - - The ability to carry out financial transactions using mobile devices such as phones or tablets
      - Advantages
        
        Convenient as it can be used any time and place
        
        Secure
      - Disadvantages
        
        Features are still limited, hence mobile banking does not offer all of the functionality of internet banking
    - - A system that allows the transfer of payments directly from one bank account to another
      - Advantages
        
        Faster payments allows almost instant transfers that are guaranteed within 2 hours.
        
        Can be accessed in a number of ways including in a branch, over the phone and online
        
        No additional costs
      - Disadvantages
        
        Faster payment is not offered by all banks or branches and the customer may therefore have to default to BACs which can take three days to transfer payments
        
        A limit is set on the amount that can be transferred in any single transaction
    - - A system that allows the transfer of payments directly from one bank account to another
      - Advantages
        
        Transfers can be made the same day assuming instructions are received prior to a set time e.g. 2pm at Barclays
        
        There is no limit on the amount that can be transferred in a single transaction
      - Disadvantages
        
        Normally, there is a fixed charge per transaction regardless of the amount transferred