Money

Money

1. The personal life cycle

   • Childhood
     • Expenditure: Sweets, Choc, Toys
     • Savings: Saving account
   • Teenagers
     • Expenditure: Clothes, Phone, bags etc
     • Savings: Debit card, savings acount
   • Young adult
     • Expenditure: Insurance, cars, tax, rent, bills, uni, food
     • Savings: Debit card, savings account
     • Debt: University bills
   • Middle adult
     • Expenditure: Insurance, car, tax, mortgage, food etc.
     • Savings: Saving for a pension
     • Debt: Mortgage
   • Late adult
     • Expenditure: Food, care, homes, holidays
     • Savings: Pension

2. Opportunity cost: The benefit lost and the next best opportunity/alternative forgone

   • E.g. Not buying some shoes in order to have a night out

3. The economic problem: The idea that resources are scarce and that wants are infinite, therefore there are not enough resources to satisfy everyone's needs and wants

4. Demand and supply

   • High supply and low demand means lower prices
   • Low supply and high demand means higher prices

5. Market demand: The total quantity demanded in the market equals the sum of the quantities demanded by each person in the market at a given price

   • Buyers demand goods from the market whilst sellers supply goods to the market
   • Demand: The quantity of goods and services that will be bought at any given price over a period of time
   • Effective Demand: Must be willing AND able to pay for a good/service

6. Borrowing: Means getting money from a lender that must be repaid in the future from earnings over a period of time

   • Term of a loan: Time over which the loan needs to be repaid
   • Methods of borrowing
     • Hire purchase: regular payments to pay for a product
     • Mortgage
     • Credit card
     • Store card
     • Personal loan
     • Overdraft
   • Features of loans
     • Can be unsecured (nothing can be taken away from you if you don't pay the money back)
     • High interest rates
     • Fixed interest rate
     • Fixed terms (to pay back and take out)
     • No flexibility (i.e. fixed repayments)

7. Ethical lending: Fair and responsible lending - looking beyond being able to pay money back