Topic 14 · finance
Personal Spending and Credit
Managing money means understanding where it goes and not overpaying for borrowed money.
Types of spending
Essential (food, housing, transport) and non-essential (entertainment, impulse buys). You plan the essential first, then the rest.
Credit and interest
Credit is borrowed money that costs interest. The overpayment depends on the rate and the term: the longer you pay, the more you give back above the amount.
Sensible debt
Debt makes sense if what you borrow for brings in more than the loan costs (education, housing). Credit for wants is an expensive pleasure.
🎯 Now possible
- tell essential from non-essential spending
- explain how loan interest works
- judge when debt is justified
Cheat sheet
Essentials first, then wants
Credit = borrowed money at interest
Longer term → bigger overpayment
Credit makes sense if the benefit beats the rate