Understand the various choices available for storing money Topic 5

Learning Intentions Understand the reasons for storing money in a certain way. Compare the different ways of storing money for Short-term savings and Long-term investments Outline the reasons for choosing to store money in a particular way

Ways of Storing Money Under the Bed or Mattress Hidden in a Box House safe Wallet or Purse Bank or Building Society Post Office, NS&I (National Savings and Investments) Stocks and shares Property

Savings Products Choosing the right one You want an account that gives you access to your money when you want it –ATM, online etc. If you are saving higher amounts of money you want to look for something with a high interest rate Length of Notice required to get your money Ethical Saving - the Cooperative Bank Culture and Religion – Muslims cannot have accounts that pay interest Other incentives

Which Savings Product Before deciding you have to think about: The amount that you can save The length of time you want to save How important is it to have easy access to your money The risks you are willing to take

Longer-term Investments If you are planning on saving for a long time (years rather than months) or if you have a large amount of money to put away for a long period of time you may consider: Shares Property – rental income Pension – 40 years

Choosing a provider Go online Visit different banks and building societies See what types of accounts they offer What Interest Rates are available Conditions i.e. amounts you may have to pay in Time scales of saving accounts ie notice period

Choosing a Bank or Building societies Location of your nearest branch Isa’s (interest Tax Free) Banking services Packaged current accounts Mortgage rates Online banking

The Post Office Found in most areas – convenient and open for longer hours than a bank Provides a range of savings accounts NS&I products - National Savings and Investments one of the largest and best known organisations in the UK. The money saved is loaned to the government to help pay for public services that are not fully financed by our taxes (safe place for your money)

Supermarkets – Opening Accounts Done via the internet, phone or post (Tesco Bank) Leaflets found at the tills and areas where you have to pay for your goods

Credit Unions Many of these organisations are based locally You have to be able to qualify to be able to use one i.e. through your work, area, trade union (common bond) They encourage members all to save regardless of the amount Not everyone wishes to have a bank account

Saving Stamps, Savings Clubs, Christmas Clubs Can save a little each month to pay for a big shopping spree ie Christmas They allow you to save between £20-£500 Organisations can go bust (ie Farepak) no interest paid on what you have saved Christmas clubs are done through supermarkets, butcher shops etc. You are restricted on where you can spend the money you have saved with them

Today ……….. Read through the Topic 5 notes (Pages 89 to 96) Answer Review Questions on Page 97 Complete the Learning Activities on Page 98

Sites to visit www.dailymail.co.uk/money/index.html www.co-operativebank.co.uk www.bbc.co.uk/raw www.islamic-bank.com www.leedscitycreditunion.co.uk www.moneymadeclear.fsa.gov.uk

Topic 6 – Understand and work out the true cost of spending What do you think this means ‘value for money?’ Discounts Special Offers Designer labels BOGOF’s Taxes – VAT Hidden Charges (postage, handling fees) Is it worth the money?

Value for Money You feel that you have paid a fair price for what you have bought The cheapest is not always the best deal or value for money – Why?

What is meant by shopping around? Internet Research Pounding the pavements Looking at catalogues

Shop Discounts Students Staff Cards Accounts Coupons Bulk buying Loyalty Cards Free gifts (catalogues)

Labels Armani Rolex Apple Mac Thornton’s Easter Egg Cristal Champagne

Opportunity Costs – give up something to get something Going for a meal Going for a drink Going to the theatre and the cinema

Taxes on what we spend- VAT Standard rate 20% Reduced rate 5% - gas electricity, domestic fuel Zero Rate – food, childrens clothes, childrens shoes, books, newspapers and magazines

Duties –government tax Cigarettes Alcohol Petrol

Insurance premium tax (IPT – Government Tax) Home, cat, pet, holiday Covers theft, fire, illness, lost luggage etc.

Hidden Charges Postage and package Import duty (Customs Charges) Booking fees Service charges Online shopping charges

Topic 7 – Money to Make Money Shares Premium Bonds – www.nsandi.com – ERNIE Electronic random number indicator equipment 1-24000 win with Premium Bonds UK Lottery – six numbers run by Camelot – money raised for good causes and some given to the government – www.biglotteryfund.org.uk 1-13,983,816 to win on the lottery jackpot 1-54 can win something – www.national –lottery.co.uk

Gambling Addictive You need to have a ‘stake’ of some kind Winning unlikely Risky Not reliable Large losses

Other investments – www.bbc.co.uk – go to Business pages Gold Antiques Paintings Prints Stamps Precious stones Jewellery Silver Coins Good and bad points of each – what can happen investing in the above?

Using Money Abroad – Foreign Money Calculations Currency what is it? Unit of money you use in different countries The Euro – used by 16 of the 27 countries in the European Union – Collectively known as the eurozone – the euro is the legal tender of the eurozone Micro states – Andorra, Monaco, San Marino, The Vatican City

Exchanging money You need an exchange rate to buy and sell – popular currencies have high exchange rates (good for the country you are visiting) Areas that are not so popular to visit have heavier charges To Calculate : Exchange rate and the amount in Sterling Look at the calculations on page 132 to convert back you have to divide see page 133 – 135 What is commission?

Paying abroad Notes Coin Travellers cheques – in Sterling, US Dollars, Euros, Canadian Dollars Plastic cards Travellers Cheques Safer – Expensive to get and cash

Exchanging abroad Banks Bureau de change Hotels Shops You risk losing money when converting back to sterling

Using Plastic – Debit Card You can use at ATM’s Shops and Hotels Look for Cirrus, MasterCard or Visa

Using Plastic – Credit Card Currency Converted as you need it – to sterling You will see what comes off in your next statement