BTEC Business Level 3 Finance (Personal) questions and answers.

BTEC Business Level 3 Finance (Personal) \| \| \| \| \| \|




questions and answers \| \|




Functions of Money - CORRECT ANSWERS ✔✔Unit of account - the actual
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monetary value, £, $, € \| \| \| \| \|




Means of exchange - money used to buy/sell/trade goods and services
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Store of value - money can be stored, saved and used in the future while value
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is maintained
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Legal Tender - anything that is recognised as a form of payment
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Role of Money affected by - CORRECT ANSWERS ✔✔Personal attitudes -
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risk taker or risk adverse
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Life stages - different views on money whether young/old
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Culture - Involves religious beliefs or ethical principles which shapes view on
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money

Life events - affects the use of money which impacts attitude towards money
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as money is used towards major life events
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External influences - things you can't control and it affects everybody e.g
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wages \|




Interest rates - reward for banks for lending giving incentive to save which
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banks benefit from high interest rates as receive more on payments
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,Life stages - CORRECT ANSWERS ✔✔Childhood - Limited needs, reliant on
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parents and buy sweets/toys but implications are rely on pocket money and
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money from presents will be spent as by their attitude
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Adolescence - more independent and less reliant on parents but may look for
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part time job and reliant on pocket money
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Young adult - university or doing career, being more independent and buying a
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car but may need student loan or borrow money to finance a purchase
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Middle age - support their family, save for children's futures and look to
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improve lifestyle but pay mortgage and planning for future with pensions and
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retirement plan \|




Old age - may downsize and have fewer financial needs for assets but is high
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for healthcare but mortgage payments stop and less income as they are
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dependant on a pension plan \| \| \| \|




Planning expenditure factors Part 1 - CORRECT ANSWERS ✔✔Avoid debt -
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plan to save \| \|




Control costs - avoid overspending and avoid debt by controlling costs and is
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done by spending habits
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Avoid legal action - motivation to manage finances as if you default on debt
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legal action taken which causes loss of possessions
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Remain solvent - being able to meet day to day expenses to pay off debts and if
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insolvent can't pay off expenses \| \| \| \|




Maintain good credit rating - lenders use this to determine whether to finance
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you with product/loan not good for people with poor credit rating
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Planning expenditure factors Part 2 - CORRECT ANSWERS ✔✔Avoid
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Bankruptcy - Plan to save \| \| \| \|

, Manage money to fund purchases - planning expenditure effectively to have
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more control over spending so more money goes in than out which helps to
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budget

Generate income/savings - Manage expenditure to save
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Financial targets/goals setting goals to plan expenditure
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Insurance against loss/illness - plan to save \| \| \| \| \| \|




Counter inflation - rate where prices increase annually as currency essentially
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devalues which causes people to invest money to ensure value increases
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Ways to Pay - Cash - CORRECT ANSWERS ✔✔Cash - notes/coins for
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payment

Advantages widely accepted, physical and consumers feel more confident as
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they can budget
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Disadvantages money lost/stolen, cannot be used online and is appropriate \| \| \| \| \| \| \| \| \| \|




mainly for small purchases \| \| \|




Ways to Pay - Debit Card - CORRECT ANSWERS ✔✔Debit Card - issued by
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the bank for the payments of goods/services
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Advantages - used to carry cash, widely accepted and used for online
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transactions

Disadvantages - causes overspending and not useful for small purchases \| \| \| \| \| \| \| \| \|




Ways to Pay - Credit Card - CORRECT ANSWERS ✔✔Credit Card- allows you
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to buy goods/services on credit and repay the instalments
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Advantages - widely accepted, loyalty schemes are offered and protection of
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purchases online \|