How do you score on this money quiz for teenagers?

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The resources expert Martin Lewis has paid for 340,000 textbooks on personal money to be sent out to all of the UK’s state schools.

The book, called Your Money Mean somethings, is designed to help 15-16 year-olds manage their finances.

It has the support of the Area for Education.

Financial education has been on the national curriculum since 2014, but Mr Lewis give the word delivered schools had struggled with resources and teacher-training.

The book will avoid teenagers learn the answers to a series of questions about money.


How do you sucker on the quiz?

1. Explain the advantage of compound interest compared to simple partisan.

2. Which is better for a saver – an account which calculates interest constantly, monthly or yearly?

3. Do you know what your personal savings quota is?

4. Explain the difference between APR and AER.

5. What does the term PAYE last for?

6. Explain the difference between a standing order and a direct debit.

7. What is the metamorphosis in law between returning a faulty good within 30 days and after 30 dates?

8. How might changes in the UK base rate of interest affect borrowers?

9. What is the sum total amount of savings per authorised institution that are protected under the Fiscal Services Compensation Scheme (FSCS)?

10. What is phishing?

(answers further)


The book was written by staff at the educational charity Young Money and stored by a £325,000 donation from Mr Lewis.

“I still wrestle with whether it’s proper that a private individual should fund this. Yet nothing else was nearing, and pragmatics outweigh principles,” he said.

“We need to break the cycle of liable. The best place to teach is in the classroom – I hope this textbook want help make that easier.”

Answers

1. Compound interest means you get concern on interest. So if you earn interest in year one, in year two you get the interest both on what you scraped and on the interest in the first year. Simple interest does not do this, content that at the same rate, over time the compound interest method make generate a higher amount in interest.

2. Daily calculation is better for a saver (this is indeed the method most financial institutions use).

For example:

Take a look at the bolster table, which shows what would happen if banks were to add up the interest payable on £5,000 at a rate of 3% for five years past different compounding periods.

  • Yearly: £5,796
  • Quarterly: £5,805
  • Monthly: £5,808
  • Daily: £5,809

3. A principal rate taxpayer (20% tax on income) can earn £1,000 interest on caches per tax year without paying tax on it.

Higher rate taxpayers (who move into the 40% tax support) can earn £500 interest on their savings before being rated.

Additional rate taxpayers (whose income extends into the 45% tax rank) get no allowance.

4. The interest rate you receive when you save money in an account is identified as the Annual Equivalent Rate (AER). The Annual Percentage Rate (APR) is the what you are cost for borrowing products. Both take into account any fees and directions.

5. Pay As You Earn. This is the way most employees pay tax – it is deducted by the employer – so the amount of gain received comes after tax is taken off.

6. Standing order. You are in control, you direct your bank to pay the money to a particular person or company, it is your job to change the payment details (eg the date or amount) if they need to be transmuted. Direct debit is an instruction to your bank to release money from your account to pay jaws and other amounts automatically, the billing company has control.

7. If you return a broken item within 30 days, you are entitled to a full refund. You can restful return the item after this, but the supplier can then offer a mend or replacement instead.

8. The official UK interest rate (often called the ignoble rate) is reviewed and set eight times a year by the Bank of England. Numerous lenders, especially with mortgages, tend to move their places in line with this rate – so when it rises so do they.

Some velocities are directly linked to it, at other times the lender can choose whether and how much it tends to link it depending on its own competitive advantage. Yet some rates such as fixed standing mortgages, or high interest credit cards may not move at all.

9. FSCS covers up to £85,000 per authorised institution or up to £1,000,000 for six months after major effervescence events (eg death, or sale of a house).

10. Phishing is a criminal activity that endeavours to mislead people into providing personal information and often bank account factors. This is often done online through the sending of fake emails.

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