G7 Citizenship, Economics and Society Module 1.3 Financial Education PDF Notes

G.T. (Ellen Yeung) College G7 Citizenship, Economics and Society Module 1.3 Financial Education 1.3.1 Rational and responsiblemoneymanagement 1. Different Uses of money...

G.T. (Ellen Yeung) College G7 Citizenship, Economics and Society Module 1.3 Financial Education 1.3.1 Rational and responsiblemoneymanagement 1. Different Uses of money : We spend our money on goods and services. :We keep part of our income for future spending. : We put our money in investmenttools (e.g. stocks and bonds) We donate our money to charities or to people in need. 2. Setting priorities andbudget forconsumptionitems Things we need Things we want Items for basic living Items notnecessary for daily living. Life may become dif cult without what we Life is not affected much without what we need want, though our mnood may be affected. : Buying items one needs rst and buy items one wants if there is spare money after one has considered the need. : Buy items one wants even if there is no spare money. Proper Budget setting: Income - Savings = Expenditure 3. Responsibilities, costs and risks to be borne when borrowing ito Borrowing The amount of money a lender The returm that the lender At the end of the borrowing (creditor) lends to a borrower receives from the borrower. Itperiod, the borrower must retum (debtor). can also be seen as the the principal and pay interest. borrower's cost of having the money earlier. 1 fi fi  :a kind of non-cash payment method. When we use it for payment, we do not need to pay the amount immediately. We are borrowing from the card-issuing company. Risk of being unable to repay debts: Lower credit scores Lead to bankruptcy Cause Stress Questions to be considered before borrowing: Is the cause reasonable? Any other options? Can you bear the risk of late repayment? Is the borrowing amount appropriate? 4. General nancial services provided by nancial institutions Deposit Services Deposits Withdravwal Interest SavingsDeposits Withdraw any time Relatively low Time Deposits Only can withdraw the money Relatively high after the predetermined deposit period Loan Services Credit card lending Personal Loan Mortgage Overdraft Insurance Services Life Insurance Medical Insurance Accident Insurance Travel Insurance Home Insurance Critical illness insurance Investment services Stock Bonds 2 fi fi  5. Investment risks and returns The goal of investing is to generate returns, which means and increase in The actual return may not always be the same as expected. In general bank deposits have the lowest risk and lowest expected return; while stocks may have higher expected return, but they also involve higher risk. Investment risk and return are positive correlated. When someone offers an investment product that has"low risk, high return", we should be vigilant and be careful. Common investment fraud tactics: 1. Approaching the victim 2. Gaining the victim's trust 3. Deceiving the victim Measures that can prevent us from falling for investment frauds: 1. Stay vigilant 2. Learn about nancial management 3. Consult experts 4. Beware of frauds CDIS COnSwtioh Donations useot ray Souing Iestnent 3 fi