Topic one

• Define sustainability

  achieving and maintaining a balance between personal income and expenditure- for the short, medium and long term. So that individuals can satisfy their needs and achieve their wants and aspirations.
• What is the level of personal debt in the uk?

  1800 billion
• How can an individual achieve sustainable personal finance?

  Be aware of their spending and what they’re spending it on.

  use weekly and monthly budget cash-flow forecasts

  have a savings plan

  plan any borrowing and only borrow what you can afford.

  Pay into a pension scheme

  Use appropriate insurance products

  Regularly monitor, review and amend financial plan.
• What is the first stage of flexible financial planning?

  Using current account statements to make sure they know when direct debits, standing orders and other regular payments are taken from the account.
• What is the second stage of flexible financial planning?

  Plan for regular bills that do not fall every month.

  • motor vehicle tax
  • council tax
  • car servicing
  • household maintenance
• What is the third stage of flexible financial planning?

  Long term considerations such as the cost of raising a family, luxury family holiday, retirement etc
• What are the 5 characteristics of a flexible financial plan?

  Balanced between different time periods (S, M, L term)

  Informed (accurate information)

  Able to adapt to changing products and services.

  Fluid (take into account seasonal variations like extra spending)

  Realistic (balance between optimism and pessimism)
• What are the three categories of expenditure?

  Mandatory, essential, discretionary
• Give an example of mandatory expenditure

  Income tax

  Council tax

  Tv license

  Third party car insurance
• Give an example of essential expenditure

  Basic food and drink

  Rent or mortgage

  adequate clothing

  payments on credit card
• What are the obstacle to sustainable personal finances?

  Making S,M and L term financial plans that aren’t flexible

  Not comparing actual expenditure to what was predicted

  Not making adequate contingency plans
• Define contingency planning

  Attempting to plan for unexpected events
• Name some favourable events

  Getting a job

  a salary increase or promotion

  winning money on the lottery

  increase in the value of an asset such as a house or money in savings
• Name some unfavourable events

  losing a job

  pay cut

  becoming ill or having to stop work

  an increase in the rate of income tax
• What is the recommended amount of savings?

  3 months of net take home salary
• What rule on payday loans did the FCA introduce in 2015?

  No payday borrower will owe more than twice the amount they borrowed.
• What are logbook loans?

  Available to car owners, who pass over the ownership document if their car as security for the lender. If they are unable to pay then the lender can take the car without a court order.
• How long does ASU pay out for?

  12-14 months
• What is CIC

  Critical illness cover is a lump sum paid out to protect the individual from the financial consequences of suffering an illness such as cancer, stroke, heart attack or MS
• Name some types of investment

  Shares

  bonds

  property

  fine art

  classic cars

  fine wine