Question 1: Define the term 'budget' and explain why it is important to create one when managing your personal finances.

Answer: A budget is a plan that estimates income and expenditure over a period of time. It is important because it helps manage money effectively, avoid overspending, and save for future needs.

Question 2: List three advantages of saving money regularly.

Answer: Advantages include building an emergency fund, enabling future purchases or investments, and providing financial security.

Question 3: Describe a scenario where someone might need to use a credit card responsibly. Include at least two responsible behaviors they should practice.

Answer: A person might use a credit card to pay for an unexpected medical bill. Responsible behaviors include paying the full balance on time each month and not spending beyond their means.

Question 4: Explain the difference between 'needs' and 'wants' with two examples of each.

Answer: Needs are essentials for basic living, such as food and clothing. Wants are non-essentials that improve quality of life, such as a new gaming console or designer clothes.

Question 5: Draw a simple pie chart that represents how you might allocate a weekly income of £100. Label each section clearly and include at least four categories such as savings, essentials, entertainment, and miscellaneous.

Answer: A correct sketch would show a circle divided into sections with proportions representing each category, e.g., 40% for essentials, 20% for savings, 20% for entertainment, and 20% for miscellaneous.

Question 6: Identify two ways to protect yourself from financial fraud or scams.

Answer: Two ways include not sharing personal banking details with strangers and regularly monitoring bank statements for suspicious activity.

Question 7: Imagine you want to buy a new phone costing £600. You're saving £50 each week. How many weeks will it take to save enough money? Show your working.

Answer: £600 ÷ £50 = 12 weeks. It will take 12 weeks to save enough money.

Question 8: Discuss the potential consequences of not paying bills on time.

Answer: Consequences can include late payment fees, damage to credit score, difficulty obtaining credit in the future, and possible service disconnections.

Question 9: Sketch a flowchart showing the steps involved in creating a personal budget. Include at least four steps and connect them logically.

Answer: A correct sketch would include steps such as: 1) List income sources, 2) Identify fixed expenses, 3) Estimate discretionary spending, 4) Compare income and expenses and adjust as needed, with arrows linking each step.