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End-of-level assessment · Run your own money
Run your own money: a car, a card and a savings account
About 60 minutes. Work it as you would at work: on your own, with the material below, then judge your work against the criteria and compare it with a model answer. Pass mark: 75% with no criterion at 0.
General education, not financial advice.
The brief
This is an exercise with fictional documents, people and firms, written to look like the real thing. It is not financial advice.
Alex is 27, lives alone and is paid monthly. They need a car in about three months for a new job across town, and have four documents in front of them. They've asked you to help them work out what it all really costs and what to do first.
Document 1. Alex's monthly budget (take-home pay and spending)
Item £ a month Take-home pay 2,450 Rent 950 Energy, water, council tax, broadband 210 Food 360 Bus pass (stops when the car arrives) 120 Phone 45 Subscriptions 55 Credit card minimum payment 60 Everything else (clothes, going out, gifts) 400 Left over 250 Estimated car running costs once Alex has the car: insurance £55, fuel £90, servicing and repairs put aside £25.
Document 2. Two ways to pay for the same used car (fictional)
Offer A: Elmfield Motors. Price £9,600. "0% APR representative." £1,200 deposit, then 36 monthly payments of £233.33. No other fees.
Offer B: Hartley Bank personal loan. The same model, same age and mileage, is listed at £8,900 at an independent dealer. Hartley Bank offers a loan of £8,900 over 36 months at 7.9% APR representative: 36 payments of £277.37. No deposit.
Document 3. Two savings accounts (fictional)
Easy Saver (Northgate Building Society): 4.6% AER variable, which includes a 1.6% bonus for the first 12 months; after that the rate is 3.0%. Withdraw any time.
One-Year Fixed Bond (Corran Bank): 4.0% AER fixed for 12 months. No withdrawals until the end of the term.
The latest annual inflation figure in the news is 3.2%.
Document 4. Credit card statement (summary) (fictional)
Balance: £2,400. Interest rate: 24.9% APR. Minimum payment this month: £60. If you make only the minimum payment each month, it will take you 6 years and 3 months to pay off the balance, and you will pay an estimated £2,064 in interest.
Alex also has £3,000 in a current account that pays no interest.
Your task
Write Alex a one-page money plan, in the box below, that:
- compares the total cost of the two car offers and says which costs less overall, and by how much;
- shows the monthly budget once Alex has the car, and what has to change for it to balance;
- puts Alex's next steps in a sensible order (the credit card, an emergency buffer, the car deposit, the savings account), with the reason for each;
- compares the two savings accounts in real terms (after inflation), and says which suits which purpose;
- names what would change the plan.
Show your working in plain numbers. Then work the reasoning check and score your plan.
Reasoning check
Worked numbers and judgement calls, marked as you go.
Work it through
Work out the total cost of each car offer.
- 1,200 + 36 × 233.33
- 36 × 277.37
- 9,985 − 9,600
Work it through
Alex takes Offer A. Work out the new monthly position.
- 233.33 + 55 + 90 + 25
- 403.33 − 120
- 250 − 283.33
Work it through
Real return after inflation of 3.2%, using (1 + rate) ÷ (1 + inflation) − 1.
- 1.046 ÷ 1.032 − 1
- 1.030 ÷ 1.032 − 1
- 1.040 ÷ 1.032 − 1
Quick quiz
Tap an answer to check it.
Alex could put £2,000 of their £3,000 towards the card now, or into the Easy Saver. Over the next year, roughly how much better off does paying the card make them?
- that's only what they give up, not what they save
- they don't: the card charges far more than the account pays
- the £2,000 still goes to the card; the gain is the interest difference
Show answer
About £400: roughly £500 of card interest avoided against about £90 of savings interest given up. 24.9% of £2,000 is about £500 a year (a little less as the balance falls), against 4.6% of £2,000, about £90.
Which is the best use of the One-Year Fixed Bond in Alex's plan?
- an emergency buffer has to be available at once
- the deposit is needed in three months
- the card costs 24.9% now; waiting a year costs far more than the bond earns
Show answer
None for now: Alex needs every pound they have within three months, and money in the bond can't be touched for a year. A fixed rate is worth having only for money you are sure you won't need before the term ends.
Spot the error
One line is wrong. Tap it.
Which sentence in this draft plan would a reviewer flag first?
Show answer
Offer A is free credit, so it's the obvious choice; the car's price doesn't matter.. "0%" comes with a price £700 above the same car elsewhere. The price matters: A happens to win here, but only once the totals are compared.
Score your work
For each criterion, pick the description that matches what you wrote, not what you meant. Be strict: the model answer comes next.
Model answer
Alex's money plan for the next three months (fictional figures)
1. The car: Offer A costs less overall, but not because it's "free". A: £1,200 + 36 × £233.33 = £9,600. B: 36 × £277.37 = £9,985 (£1,085 of interest on an £8,900 car). A's car is £700 dearer, but that's less than B's interest, so A is about £385 cheaper in total. It needs a £1,200 deposit in three months.
2. The budget with the car. Car payment £233 plus running costs £170 = £403 a month; the bus pass (£120) stops, so spending rises by £283. Left over falls from £250 to about £33 short. Fix: the card will already be cleared (step 3), so its £60 minimum has gone, which brings Alex to about £27 over; cutting subscriptions from £55 to £35 leaves about £47 a month, which goes to rebuilding the buffer.
3. In this order, starting now: - Clear the card now: £2,400 of the £3,000. At 24.9% it costs about £45–50 a month in interest; no savings account comes close. Its £60 minimum then goes, so the monthly surplus rises to about £310. - Keep the other £600 as an emergency buffer in the Easy Saver, so a repair or a broken boiler doesn't go back on the card. - Save about £310 a month for three months (£930). With the buffer, that's about £1,530 when the car is bought; the £1,200 deposit leaves a buffer of about £330, rebuilt at about £47 a month. A bigger buffer needs less spending in the next three months; Offer B needs no deposit, but costs about £385 more. - Don't use the fixed bond for now: all of Alex's money will be needed within three months.
4. Savings in real terms (inflation 3.2%): Easy Saver about +1.4% while the 1.6% bonus lasts, about −0.2% after it ends; the fixed bond about +0.8%, but locked for a year. The Easy Saver suits the buffer now; look again when the bonus ends.
5. What would change this plan: a cheaper insurance quote (each £10 a month saved goes straight to the buffer); the job starting later (more months to build the deposit, so the buffer can stay larger); a car loan at a lower APR or a cheaper car that would make Offer B's total lower than A's.
Why this answer works
- It compares totals, and names the trap in both directions: 0% isn't free (the price is higher), and the cheaper price isn't cheaper once interest is counted.
- It counts what's given up: every pound left on a 24.9% card costs far more than it could earn, but a small buffer stops Alex going back on the card.
- It thinks in real terms and matches each account to a job, including when the bonus ends.
- Every step has an amount, a reason and a place in the three-month timetable.
What a reviewer would flag in a weaker answer
- "Take the 0% offer because it's interest-free", without the price difference.
- Leaving the bus pass in the budget, or the running costs out.
- Putting the £3,000 in the fixed bond while the card charges 24.9%.
- Clearing every penny of savings with no buffer, so the next repair goes back on the card.
A second opinion
Studyfern has no AI of its own. For feedback on your answer, copy this into an AI assistant you trust, with your answer pasted at the end.
You are a strict reviewer of personal-finance coursework. I was asked to write a one-page money plan for a fictional person, Alex, from four fictional documents. Mark only what I wrote; if my plan doesn't clearly meet a higher description, give the lower score. Do not give me personal financial advice: mark the exercise. THE DOCUMENTS (all fictional). Budget: take-home £2,450 a month; rent 950; bills 210; food 360; bus pass 120 (stops when the car arrives); phone 45; subscriptions 55; card minimum 60; everything else 400; left over 250. Car running costs: insurance 55, fuel 90, servicing 25. Car Offer A: price £9,600, 0% APR, £1,200 deposit, 36 × £233.33. Offer B: same car £8,900 elsewhere, bank loan of £8,900 over 36 months at 7.9% APR, 36 × £277.37. Savings: Easy Saver 4.6% AER including a 1.6% 12-month bonus, then 3.0%, withdraw any time; One-Year Fixed Bond 4.0% AER, no withdrawals for 12 months. Inflation 3.2%. Credit card balance £2,400 at 24.9% APR, minimum £60. Alex has £3,000 in a current account at 0%, and needs the car in about three months. KEY NUMBERS. Totals: A £9,600, B about £9,985 (about £385 more). With Offer A, monthly spending rises by about £283 (payment 233.33 + running costs 170 − bus pass 120), so the budget goes about £33 short. Real returns: Easy Saver about +1.4% with the bonus, about −0.2% after; fixed bond about +0.8%. The card's interest is about 24.9% a year, far above any savings rate. THE RUBRIC (score each 0, 1 or 2): 1. Look past the headline: the car. 0 = picks by headline. 1 = totals, but a cost missed, the difference not stated, or the trap not named both ways. 2 = both totals, the difference, and the trap named both ways. 2. Budget that balances. 0 = no car budget, or one that doesn't add up. 1 = payment added but running costs or the bus pass missed, or the gap not dealt with. 2 = new monthly position worked out and specific changes that close the gap with some margin. 3. Count what you give up: debt before saving. 0 = keeps cash or saves while the card stays. 1 = pays the card but no buffer, or no reason. 2 = clears or sharply reduces the card early with the reason, keeps a stated buffer, and plans the deposit. 4. Think in real terms: savings. 0 = headline rates only. 1 = real returns, but one account only, the bonus ending missed, or no job matched to each account. 2 = real returns for both accounts (and after the bonus), each matched to the right purpose. 5. Order and reasons. 0 = no order, or an order that costs money. 1 = sensible order, but a step without its reason or amount, or the timetable not checked. 2 = every step in order with reason and amount, fitting the three-month timetable. 6. What would change the plan. 0 = nothing. 1 = general changes. 2 = at least two specific changes, each with its effect. HOW TO MARK. For each criterion give the score and quote my exact words that justify it. List any number of mine that differs from the key numbers by more than rounding. Add the total out of 12 and say whether I pass (9 or more, and no criterion at 0). Give at most three priority improvements, each with an example from my plan. Do not rewrite my plan. MY PLAN: (paste it here)