make financial decisions in the short,
medium or long term?
You can decide what to do with your money in different ways.
You can plan for the short, medium or long term. Once you have
made your weekly or monthly budget and you
spare money you are then in a position to make that
If you decide on the short term,
you will spend the spare money on something you would like
or need immediately.
If you decide on the medium term,
you might save for a new car or washing machine. You will plan
over a fixed period of time - either
you will save a small amount of money every week, or you
out a loan that you can repay over a fixed period of time,
for example over 3-5 years.
If you decide on the long term,
you plan for a long financial commitment or for a long term
plan. Such a long term commitment
could be a mortgage. Another example of a long term plan
is to save for retirement or to pay for your children's further
Whichever way you decide,
you should keep in mind that you might need money for a rainy
day. If you
in the short term and something unforeseeable happens
you could find yourself facing considerable financial difficulties. So
always make sure that you take these unforeseeable
events into consideration.
some examples of unplanned events which will require
money to put right. Read the cases and then list some of the
advantages and disadvantages of each
Car repairs Your car fails its MOT. In order
for it to pass you need to pay around £150 for repairs.
You do not have this money at the moment. Do you:
take out a loan and pay for the repairs?
not get the car fixed?
New washing machine
Your washing machine
breaks down. In your family you have four children under the
age of 10 years old so
it is really important that you are able to wash their clothes
You do not have any spare cash to buy a new washer.
Your options are:
go to the launderette
rent a washer
pay to get the washing machine repaired
buy a washer on six months interest-free
buy a washing machine from a catalogue
get a loan that charges interest.
A pipe bursts and floods your
ground floor. Your carpet needs to be thrown away along with your sofa.
You do not have
house contents insurance. Your options are:
remove the carpet and sofa but do not
buy a new carpet and sofa on six months
buy from a catalogue
get a loan payable with interest to buy
a new carpet and furniture
go and visit your local furniture exchange.
How you plan affects your finances. These
examples have shown that you can get into severe financial difficulties
if you don’t plan ahead.
If you consider these events in your medium and long term plans, you
can avoid financial problems so always try to be aware of your different
short, medium and long term financial needs.