Question 1: Define the term 'budget' and explain why it is important to create a personal budget.

Answer: A budget is a plan that outlines expected income and expenses over a period. It is important because it helps manage money wisely, avoid overspending, and save for future needs.

Question 2: List three different sources of income that a young person might have.

Answer: Part-time job earnings, allowances from parents, money received as gifts or birthday presents.

Question 3: Describe what is meant by 'needs' and 'wants' in terms of personal spending.

Answer: 'Needs' are essentials required for basic living, such as food, clothing, and shelter. 'Wants' are non-essential items that improve quality of life, like new gadgets or entertainment.

Question 4: Explain the concept of 'saving' and give two reasons why saving money is beneficial.

Answer: Saving is setting aside money for future use. It is beneficial because it helps prepare for emergencies and enables purchasing items or experiences later.

Question 5: Imagine you receive a monthly income of £300 and spend £150 on living expenses. How much money can you save each month?

Answer: £150

Question 6: Discuss the risks associated with borrowing money from informal sources, such as friends or family members.

Answer: Risks include potential damage to relationships if repayment is delayed or not made, and the possibility of misunderstandings about repayment terms or expectations.

Question 7: Draw a simple diagram to illustrate the concept of a 'bank account' showing the flow of money in and out. Label the key components such as 'deposit', 'withdrawal', and 'balance'.

Answer: A correct sketch would include a bank account box, arrows pointing into the account labelled 'deposit', arrows pointing out labelled 'withdrawal', and a section showing the 'balance' that updates accordingly.

Question 8: List three factors you should consider before making a big purchase, such as a new phone or a gaming console.

Answer: Cost and affordability, whether it is a need or want, and if it fits within your budget or savings plan.

Question 9: Explain what is meant by 'interest' when borrowing money or saving in a bank account.

Answer: Interest is the extra money paid by a borrower for using borrowed funds or earned by a saver from the bank as a reward for saving money.

Question 10: Sketch a plan for a simple savings goal, including how much money you want to save and a timeline for achieving it. Label the parts clearly.

Answer: A clear sketch would show a target amount (e.g., £500), a timeline (e.g., 6 months), and monthly saving amounts needed to reach the goal. Labels should include 'Total goal', 'Monthly savings', and 'Timeline'.