Saving and Borrowing Presentation

Discussion points (teacher guidance)

Situation 1

 Sunil should probably just buy it outright as he can afford it.

 He could use his credit card for convenience but he should make sure that he
pays off the full amount within the month.
 Sunil does not need a loan, so it would be silly for him to take one out as it would
cost him 6% extra in interest charges.
 Sunil has lots of money left each month. He could look at setting up a savings
account of some sort. He could even think about buying a house, or arranging a
pension.

Situation 2

 Andrew could save up for the games console. This would take him 40 weeks.
This is quite a long time to wait, and the console might be out-of-date by then. It
might also be cheaper.
 Buying it from the shop is the expensive option although the advantage is that he
can have the console straight away. 29.9% is very high but is typical of what
shops would charge. It means that he will be paying back nearly £260.
 He could borrow the money from his Mum as she will probably not charge him
any interest so he would only have to pay back the £200. It will take 40 weeks to
pay her back at £5 per week.
 He could try and borrow money from a bank, which will be cheaper than
borrowing the money from the shop.

Situation 3

 Tolu - Option A is probably the most sensible as it means that her savings will
grow because interest is being paid. For example, if she put £100 in the bank for
a year, it would be worth £105 at the end.
 She could tell her parents that she does not need so much money but she might
as well take the money if it is offered. As she gets older she may find that she
does spend more of the money she is given. Also, she might want to save it up
and buy something big.
 There is not much point in spending money for the sake of it so option C is not a
particularly good idea unless she wants something in particular. Better to save up
until she wants to needs something.

Situation 4

 Jhon - Borrowing from loan sharks is very expensive, but for some people it is
the only way of borrowing money.
  He could try another bank, but they might not lend him the money because he
already owes money to the other bank. He is also increasing the amount he
owes and as he is on a low wage, he might find this difficult to pay back.
 His best option is to use the bus if he can, and try to save up for a new car.
 He could try and get a better paid job, or do some more training and education to
try and improve his job prospects.

Situation 5

 All three options are reasonable and Kim is in such a good position financially.
 She will need to spend some on her education and paying for essentials like rent
and food, but she should still have plenty left over which she could save.
 Buying a house could be a good idea, especially as she can get more money
from renting the rooms out.
 She could have a year off and travel the world and still come back and finish her
education.
 It’s worth pointing out to students that having lots of money, tends to give you lots
of choices.

Situation 6

 Vijay - The two loans in a) and b) are a similar APR so there is not much to
choose between them. The bank loan would be slightly cheaper, but she might
find it more convenient to buy the car and get the loan at the garage.
 Using her credit card is only a good idea if she plans to pay it off quickly. At 1% a
month, if she pays it off in 8 months for example, she will only pay 8% APR.
 Her wages are due to go up in the future, so she could look at waiting a while, or
borrowing money over a longer period.

Situation 7

 As Carl is not very good with money, it would be a good idea for him to pay off
what he owes before he starts spending more money.
 His Mum and his mate might be annoyed if he is buying new trainers while he still
owes them money.
 It would not take him very long to pay off his debts and save up for the new
trainers.

Situation 8

 Emily has money left over every month so she might as well save it and earn
interest on it.
 She would be better off if she chose a savings account as these payer higher
rates of interest.
 Her choice depends on whether she thinks she might need to use her savings at
short notice. If not, she should go for the high-interest savings account.