PSD: Managing Own Money

Challenge 3

Level 2 – Challenge 3

You are about to look at 4 different situations.

For each you need to consider/discuss with family…

• How regularly these events/situations occur

• Whether you or your family have ever been affected by any/all of them

• How did you or your family pay / budget for them?

Buying a Car

• You could save the money up front perhaps in a savings account and buy a car outright but remember there are additional expenses (insurance & road tax).

• You could sign up to a finance agreement – look out for good ones with 0% APR for the first few years – where you put down a deposit and then pay for the car (plus interest) over a fixed period of time, making monthly payments to the company you are buying from!

• You could go to a bank and take out a loan – there are lots of ways of repaying off a loan, but the most popular is by setting up a monthly standing order for your repayments.

Planning an Event

• Is the event a one-off or annual event?

• How much is it likely to cost?

• Is it something very expensive – e.g. wedding or holiday abroad? This may require a bank loan or for you to have saved the money in advance by putting some money aside each week/ month for a fixed time period.

• If it’s not very expensive, like a party at home only requiring the purchase of food, drinks and paper plates then it may be paid for on a credit card which is paid off at a later date.

Paying Bills

• You can get ‘quarterly’ bills sent to you which you then pay off at a bank – from a bank account, by cheque or with cash.

• You can set up a monthly standing order or direct debit to pay off your ‘predicted’ (forecast) bill values.

• Many students (aged 18+) live in shared digs and have meters which you have to pay into in order to continue to get gas, electricity and access to a phone. The meter is emptied when the ‘quarterly’ bill arrives and the money should (if correctly costed per unit) pay off the bill.

Shopping

• Consider how often you buy certain items such as food, clothes and other household goods. The frequency of these purchases may influence how you save/pay for them.

• Some people pay for everything on a credit card and then pay off all/some of their credit card bill when it comes each month.

• Some people pay for everything using a debit card or by cheque so it is automatically paid for directly from their bank account.

• Some people only deal with cash so they know they have the money to pay for the things they need when they buy them.

Challenge 3

• Having looked at the 4 situations and read through some suggested methods of paying for them, discuss with your friends and family how they ‘budgeted’ and paid for such events. Make notes.

• Now fill-in the Challenge 3 document called: PSD-MOM-L2-C3.doc, save your updated document and email it back to me.