Legal tender

- Bills (Notes)
- Coins
Inflation
- Inflation occurs when the purchasing power of your money decreases meaning it will
take more money to purchase goods and services
Purchasing Power
- Money is worth something because we accept that it has a specific value, this is the
power of our money, it is worth a specific amount and that amount can get you goods
and services
Income
- Income is money that an individual or business receives from various sources, such as
wages, sales, interest, or dividends.
Gross Income
- The total amount of income received by a person is known as his or her gross income.
Discretionary Income
- The income that is left after necessities have been paid for is called discretionary
income.
Disposable Income
- What is left is known as take-home-pay or disposable income.
Income and Price
- The amount of money consumers have to spend has a big influence on what they buy.
Status
- This desire to flaunt purchases to impress others is called conspicuous consumption.
Current Trends
- For many people, clothing helps create an image because it’ll make you think you look
cooler or better.
Customs and Habits
- Family, religion, community, and customs often affect consumer choices. Same can be
said with habits, if you make habitual purchases, you are more likely to make that same
purchase again. (e.g. Coffee, tea, etc.)
Promotion
- Business advertising and promotion are designed to influence consumer spending and
create a desire for products and services.
Impulse buying is
- Impulse buying is when you purchase something that you didn’t plan to buy.
Savings Plan
- Putting money aside for a purchase you plan to make in the future
Investment plan
- Putting money into things such as stocks and bonds for the purpose of trying to make
money.
Why People Save
- Emergency Needs
- Emergency Needs include sudden expenses like kids or unemployment
Short and Long Term Goals
- Short Term Goal: Purchase of inexpensive items
- Long Term Goal: Save for a year or longer
Security & Future Needs
- This includes your own house and your own expensive children and after working
enough, you can retire.
When you deposit money in a bank, you are actually lending the bank your money so that the
institution can lend it to other customers who want to borrow it, that’s why they give you interest,
it is an incentive to get you to keep your money in the bank.
Examples of Commercial Banks in Malaysia
- Ambank, Affin Bank, Maybank, OCBC, CIMB, etc.
Interest is money you receive over time for letting others borrow your money.
Interest rates are usually based on a one-year time period
Principal is the original amount of money you deposited
Simple interest is interest calculated only on the principal
Compound interest is interest calculated on the principal plus any interest already earned.

Lesson 4
Diversification is
What are the different methods to diversify my money?
Please define the diversification methods below:
Savings Accounts
Bonds
Mutual Funds
Stocks - Individual Companies/ Exchange Traded Funds (ETF)
Property
Bitcoin
Rare Item ( Picasso Painting)
Commodities - Gold/Silver
Pros and Cons to Investing are

Capital Gains is
Capital Loss is

Diversification is investing in many different things so that if one thing doesn’t work out, you
don’t lose everything
What are the different methods to diversify my money?
Savings Accounts
Keep some money in a savings account to use for later, keep the money in an account with
decent interest rates, but certain accounts will require more money for different interest rates.
Bonds
they are sort of like high-interest loans that come in three types; firstly and the most risky one is
private corporations because they can close at any time due to complications but they can also
pay off very well and give the most interest; secondly there are municipal bonds, they are issued
by any non-federal government and will give interest based on taxes, all earned interest is tax
free as well; and lastly federal government, it pays the least but it’s the safest and they are
obligated to pay you back even if they go bankrupt
Mutual Funds
Professionally managed portfolios made up of stocks, bonds, and other investments.
Stocks - Individual Companies/ Exchange Traded Funds (ETF)
Individual Companies: If bought at the right time can result in massive yields and great ROR
meaning you earn money
ETF: This fund has many companies inside of it. There is less risk than individual companies but
still gaining good amounts of money if not more at times but they often cost more money as
well.
Bitcoin
There is a limited supply of them that are in the block chain system, along with the fact the
Bitcoin has already hit rock bottom at $15k in 2022 so it’s highly unlikely that they will plummet
again as trends currently show it going upwards despite fluctuation
Rare Item ( Picasso Painting)
Rare items often have a very limited supply meaning they will have an increase in price
indefinitely because there are none or very little being made.
Pros and Cons to Investing are
Advantages
1. Investments often yield a higher rate of return.
2. Investments can grow at or exceed the rate of inflation.
Disadvantages:
1. The yield (income return) is not guaranteed 2. There is some risk of losing part or all of the
money.
Capital Gains is
When an asset increases in value
Capital Loss is
When an asset decreases in value
Lesson 5
What is Credit?
advantages and disadvantages of using credit
A consumer's credit history consists of information such as:
What banks are looking for in a borrower Character, Capacity, Capital Questions
Please include the questions the bank would ask for the three C’s slides 13-15:
Credit
Credit is an agreement in which a borrower receives something of value now and agrees to
repay the lender at some date in the future, usually with interest.
Advantages and Disadvantages
Advantages
They can give cashback
They can give rewards/points
They don’t come out of our bank account
They are convenient
They allow us to buy items when we need them
It provides protection in case someone attempts to steal our money because it isn’t ours, it’s the
bank’s cash

Disadvantages
High Interest
Some of them charge additional fees
Financial difficulties may arise if one loses track of how much has been spent each month
Should have some collateral on hand
Increased impulse buying may occur
If you are late to payment, not only do you get charged interest but your credit score will also
lower

Credit History
A record of a consumer's ability to repay debts and demonstrated responsibility in repaying
debts.

Character, Capacity, Capital Questions

Character - Will you repay the debt? (How likely is it that you will repay it on time)
Capital - What if you don’t repay the debt? (Do you have anything that can be used as
collateral)
Capacity - Can you repay the debt? (Do you have the means to pay back the money that was
lent)