CeFS key terms Topic 9

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Financial Terms

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palacey
Created by palacey almost 6 years ago
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Question Answer
Inflation A rise in prices, which means that the purchasing power of money falls
Insurance Products that give financial protection against certain events
Investments Money paid into financial products; the aim is that the value of the product will grow over time and so the person will eventually make a profit
Mandatory expenditure Compulsory outgoings; they do not necessarily apply to everyone, but if they do apply they must be paid
Mortgage A loan taken out to pay for a property, usually over a long term such as 25 years
National Insurance Contributions Money deducted from the pay of people who are employed or self-employed and used by the government to fund state pensions and other benefits
Needs Things that people need to survive, such as food, basic clothing and a place to live
Office of National Statistics The independent organisation that produces statistics on many aspects of life in the UK
Pension An income that people receive after retiring from work. In the UK people receive a pension from the state; some people also receive pension payments from schemes run by their former employers or arrangements that they have made for themselves
Premium Bond A lottery bond, issued by NS&I, entered into a monthly prize draw with tax-free prizes
Real terms A value adjusted to account for changes in prices. ie although someone may receive a nominal pay increase of 5%, if inflation is 3% then in real terms the pay increase is approx. 2%
Retail Price Index (RPI) One of the ways the government measures inflation.
Self -employment Earning an income by selling your goods or services directly to a consumer, rather an being employed by somebody else and being paid a wage or salary
Transaction Buying or selling something
Utility An essential public service, such as electricity, gas, water and sewerage
Wants Things that people would like to have but can survive without, such as entertainment, fashionable clothes etc
Aspirations Things or experiences that people would like to have in the future, for example owning a home instead of renting
ATM Automated teller machine, also known as a CASH MACHINE
Balance Income minus expenses
Budget balance Total income minus total expenditure: a person's net financial situation.
Budget A plan of expected incomings and outgoings over a set time period such as a month. Also a term given to the government's annual spending plan
Budget deficit A situation in which outgoings exceed income
Budget surplus A sum of money available once all the essential expenditure in a given period, eg a month, has been made
Cash flow forecast A plan of expected incomings and outgoings over several time periods, such as the next 3 months
Chancellor The Chancellor of the Exchequer, The British Cabinet Minister responsible for financial and economic matters and in charge of the Treasury.
Consumer Prices Index (CPI) One of the means the government uses to measure inflation.
Credit history A record of money borrowed and repaid by an individual.
Current account Bank or building society accounts where people can store their money in the form of electronic balances and withdraw it to make payments
Discretionary expenditure Voluntary spending on products and services that people want now, and savings towards items they aspire to buy in the future
Dividend A payment of profits from a company to its shareholders, often at twice-yearly intervals
Duty The tax paid on certain items, including fuel, cigarettes and alcohol
Essential expenditure Spending on items required to live, eg rent or mortgage repayments, food & drink, water, gas, electricity
Income Earnings, savings and interest payments received within a certain timeframe
Income Tax Tax paid on earnings from employment, self-employment and interest on savings