Question 1: What is a budget, and why is it important to create one when managing your money?

Answer: A budget is a plan that shows how much money you expect to earn and spend over a period of time. It is important because it helps you manage your money wisely, avoid overspending, and save for future needs.

Question 2: List three different types of income that a person might receive.

Answer: Wages or salary from a job, money received from selling items, or allowances and gifts from family.

Question 3: Explain the difference between needs and wants with two examples of each.

Answer: Needs are things you must have to survive, such as food and clothing. Wants are things you would like to have but are not essential, like video games or designer clothes.

Question 4: Describe what is meant by 'saving' and give two reasons why saving money is important.

Answer: Saving means setting aside money to use in the future. It is important because it helps you pay for unexpected expenses and achieve long-term goals like buying something special.

Question 5: Imagine you receive £20 as your pocket money. List three ways you could spend or save this money responsibly.

Answer: You could save £10 in a piggy bank or savings account, spend £5 on a book or a small treat, and donate £5 to charity or help someone in need.

Question 6: Draw a simple diagram of a basic piggy bank and label its key parts, such as the slot and the body.

Answer: A rough sketch of a piggy bank with a slot at the top for coins, a rounded body, and labels for each part.

Question 7: What is a bank account, and how can it help you manage your money?

Answer: A bank account is an account you open with a bank to store your money safely. It helps you keep track of your money, earn interest, and access your funds easily.

Question 8: Identify two ways you can reduce unnecessary spending and save money.

Answer: Avoid buying items you don’t need, and compare prices before making a purchase to find the best deal.

Question 9: Imagine you want to buy a new phone that costs £200. Describe how you could plan to save for it over the next few months.

Answer: Set aside a fixed amount of money each week or month from your pocket money or earnings, track your savings, and avoid spending on other non-essential items until you reach your goal.

Question 10: Explain why it is important to understand the value of money and how it affects your daily decisions.

Answer: Understanding the value of money helps you make informed choices about what to buy, how much to spend, and how to save, ensuring you use your money wisely and avoid financial difficulties.