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Year 9 NSW
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Financial responsibility
Topic : Financial responsibility
In this topic you will learn...
Chapter 1 :
Budgeting
A budget is a financial plan
Your current financial position is the amount of money you have or owe after subtracting your expenditure from your income
Your past earning and spending behaviour will indicate any financial patterns
It is easy to develop a budget around a regular income
If you have a variable income you may need to average your income over a longer period in order to minimise the effect of irregularities
Fixed expenses are regular, usually involuntary, expenses with the same or a predictable value
Variable expenses are those arising from circumstance, of no predictable value
Impulsive spending is the purchase of goods without adequate decision making
Start a budget with an objective in mind
Budgeting balances your income with your expenditure
Chapter 2 :
Insurance
Insurance is a type of risk management plan
A premium is an amount of money paid for an insurance policy that reflects and financially covers the likelihood of an event
A claim is the application for money to cover a loss
Compensation is an amount of money deemed sufficient to cover a loss
An insurer manages the money they receive via premiums against the risk of a consumer making a claim
Consumers usually insure their possessions and/or their livelihood
Insurance provides peace of mind and financial protection against loss
Car insurance covers damage to vehicles, personal injury and theft
Home and contents insurance covers damage to property and theft of possessions
Health insurance covers medically related expenses
Chapter 3 :
Legal consequences of debt
Debt is a financial obligation to repay money owed
A creditor is the lending party to whom money is owed
A debtor is the borrowing party who owes the money
If a debtor stops making repayments they are in default of the debt
If a debtor is behind in making repayments, they are in arrears of the debt
Refinancing a loan involves renegotiating the conditions of a loan contract
Debt consolidation is the process of combining debts into one loan
You may choose to sell the asset or surrender it to a creditor to resolve the debt
Creditors must follow a legal process to recover money owed to them
A default notice is a document that notifies a debtor of their financial obligations to a creditor
Chapter 4 :
Other effects of debt
Financial problems can negatively affect a debtor's health and wellbeing
Stress is a common response to financial pressure
Physical signs of stress include headaches, muscle tension, fatigue, insomnia and low immunity
Emotional signs of stress include anxiety, depression and lack of concentration
Negative behaviour includes alcoholism, drug-taking, physical and emotional abuse
Financial trouble can lead to gambling problems
Debtors may resort to self-harm and suicide to cope with financial pressure
Financial problems may directly or indirectly interpersonal relationships with family, friends and co-workers
A debtor`s dependents may suffer from a decreased standard of living or poverty
A debtor faces restrictions such as an inability to afford things they need
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1 final exam
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