Unit 2: Money Management Solutions (MMS)
Topic 1: Understand the tools used in managing money
After completing this topic, you will be able to:
- compare the different channels for managing money;
- compare the automated tools used to transfer money electronically;
- understand how these tools help you to keep track of your money;
- understand security features and risks.
Topic 2: Compare different types of payment card
After completing this topic, you will be able to:
- define, understand the purpose of, and compare the features of debit and credit cards;
- define, understand the purpose of, and compare the features of other cards;
- understand what a 'card limit' is;
- understand the different chages on cards and the different charging structures;
- understand what is meant by 'interest-free credit period';
- understand the meaning of 'minimum payment' and the consequences of meeting only these requirements.
Topic 3: Understand types of borrowing product and work out the cost of borrowing
After completing this topic, you will be able to:
- define and understand the effect of the terminology relating to borrowing;
- complete calculations for APR and EAR;
- define the term 'depreciation of goods' and explain how this can affect credit decisions;
- understand the methods, benefits and features of using credit (that is borrowing)
- understand different types of borrowing product, such as hire purchase;
- understand borrowing terms and conditions;
- distinguish between defferent sources of borrowing for the short, medium and long trems;
- compare products in terms of interest rate and other charges;
- understand legal issues, such as secured and unsecured lending, cooling-off periods, joint-name borrowing and age limits for borrowing;
- understand what a 'credit agreement' is;
- understand what is meant by 'credit scoring' and 'credit history'.
Topic 4: Understand the benefits of paying in advance
After completing this topic, you will be able to:
- explain the methods of prepaying and their advantages;
- understand different types of payment in advance;
- explain how choices about when to pay and the ability to pay in advance will help when budgeting.
Topic 5: Understand the issues surrounding the provision of insurance
After completing this topic, you will be able to:
- explain the purpose of insurance and the different types of insurance;
- define some key words and phrases used in insurance;
- understand the difference between ‘life assurance’ and ‘general insurance’;
- explain how whole-of-life assurance and endowment assurance work;
- explain how different types of general insurance work:
- understand what ‘insurance premium tax’ is;
- list the different providers of insurance and assurance;
- recognise the rights and responsibilities of both parties to an insurance contract.
Topic 6: Understand the purpose of bank statements
After completing this topic, you will be able to:
- explain what a 'bank statement' is and some of the entries that appear on it;
- understand the effect of bank charges in planning;
- explain balance enquiries;
- explain interest earned statements and income tax on interest earned, and how to get tax paid back;
- balance a bank statement and reconcile it, including items such as cheques and credits not yet received, variable direct debits and mistakes.
Topic 7: Create a medium-term budget
After completing this topic, you will be able to:
- explain why a budget is important;
- explain how a budget might help you to avoid paying bank charges or interest;
- work out a budget for several months;
- explain how direct debits and standing orders will help when budgeting.
Topic 8: Sources of financial advice and the limitations
After completing this topic, you will be able to:
- explain the different sources of financial advice;
- describe how consumer advice websites and magazines (such as Which?) can help when sourcing financial advice;
- understand the role of UK Payments Administration.