1. Needs, Wants And Aspirations Flashcards
1
Q
What are needs?
A
- essential items that everyone must have to survive
- e.g. water, food and shelter
- needs are quite limited; people need enough clothes to keep them warm and dry, or to protect them from the sun in a hot climate
2
Q
What are wants?
A
- wants are optional, ‘nice-to-have’ items that are desirable but not essential
- e.g. jewellery, or going to the cinema
- they are items and experiences that people wish they could have, over and above their needs - they can not fulfil their wants until their needs are met
- there is no limit to what someone could want - a few clothes would cover their basic needs but they probably want to have a good choice of fashionable clothes
3
Q
Difference between needs and wants?
A
- essential items (food, water etc) are needs for everyone, more expensive food and clothes are not necessary so they are wants
- people need to be aware they are making a decision to buy a want if they buy more food or clothes than they actually require, or choose more expensive products when cheaper ones are available - e.g. everyone needs to eat but some people choose to buy luxury food such as prime steak
4
Q
How are needs and wants related to prices?
A
- needs and wants are related to the price of products and to peoples ability to buy them
- products such as new shoes or holidays might be seen as needs by many people in developed countries, where as these items would be luxuries and seen as wants by people in less developed countries
- LEDCs protection for feet is a need but good shoes are a want
- as a person becomes more wealthy, items that used be wants become needs - they can afford to buy them and get used to having them
5
Q
What are aspirations?
A
- hopes for the future - items or experiences that people wish to have in the medium term or long term future
- e.g. going on a exotic holiday, sharing a flat with friends or getting a job
- aspirations can be realistic (such as buying a nice car) or unrealistic (buying a luxury yacht)
6
Q
How do needs, wants and aspirations change over the life cycle?
A
- needs do not change over the cycle but a person’s values (the things they consider important to them) might change as they grow older and have different experiences
- As their values change - their wants and aspirations might change too
- these changes affect how people manage their money
7
Q
Birth and infant hood
A
- 0-2 years old
- typical events: birth, learns to walk and talk
- needs: warmth, safety, food, shelter
- wants: love, attention
- aspirations: none
8
Q
Childhood (preschool)
A
- 2-5 years old
- typical events: nursery + preschool, makes friends, learns through play, develops communication skills
- needs: warmth, safety, food, shelter
- wants: love, attention, toys, treats
- aspirations: bigger + better toys
9
Q
Childhood (school)
A
- 5-12 years old
- events: starts school, makes longer term friends, learns skills such as reading + writing
- needs: warmth, safety, food, shelter
- wants: love, attention, toys, treats, fashionable clothes, music
- aspirations: fame, particular careers, independence
10
Q
Teenager
A
- 13-19
- events: puberty + adolescence, schools tests + exams, college/sixth form, learns to drive, develops closer relationships, starts part time job
- needs: warmth, safety, food, shelter
- wants: love, attention, social life, fashionable clothes, music, transport (motorbike, bicycle, car), material items e.g. phone
- aspirations: fame, fortune, love, independence, self-expression
11
Q
Young adult
A
- 18-25
- events: uni, moves away from home, qualifies, full time job
- needs: remains the same as before but may have to be provided from the young persons own (limited) income
- wants: own possessions e.g. car, an income to pay for essential bills and for entertainment, love
- Aspirations: holidays, cars, own home, own business
12
Q
Mature adult
A
- 26-40 years old
- events: career promotions, career changes, marriage, children, buys property, takes on a mortgage
- needs: children’s needs may take priority
- wants: bigger home (more space), material goods, linked to children’s futures e.g. education
- aspirations: health + happiness, children, career promotion, security
13
Q
Middle age to late middle age
A
- 41-60 years old/ 55-65
- events: career promotions + changes, children leave home, pays off mortgage, early retirement
- needs: don’t have but may need others to help to provide them - especially health needs
- wants: comfort, security, new experiences e.g. travel, new sports and hobbies, voluntary or charity work
- aspirations: material luxuries e.g. cruise or luxury car, quiet life, security
14
Q
Old age/ retirement
A
- 66+
- events: part time job, leisure interests + hobbies
- needs: care, help, support
- wants: safety, security
- aspirations: may be aspirations for children, or grandchildren to settle, marry and do well
15
Q
What causes changes in needs and wants from childhood to adulthood?
A
- lifestyle
- the prevailing culture of society in which they live
- the size of their family
- their ability to buy products
16
Q
Why do people need medium term and longer term savings?
A
- people needs financial products that allow them to save over a longer period of more than 3 years
- they do this to put away money to cover future needs and wants and allow them to fulfil their aspirations
- e.g. young person aiming to open a business in 5 years time needs to save money for the capital (funds to pay for premises, equipment, and any other costs)
- banks and certain other providers offer long term savings accounts where customers can build up a lump sum
17
Q
Why do people make Investments?
A
- longer term form of saving - people invest to save for a longer term want or aspiration
- it is more risky then long term savings accounts but can bring in a higher return
- a parent may save money in an investment scheme while their children are young so they can help them with their education later
18
Q
Why do people have pensions?
A
Many people save money in a pension scheme throughout their working lives to finance their retirement
19
Q
Longer term borrowing
A
- when people borrow money to finance a large purchase - they need to pay it back over a long period, otherwise they can not afford it
- e.g. a mortgage which is a loan secured on the value of the property being purchased
- hire purchase is a type of secured consumer credit to finance items such as cars and furniture, which involves borrowers repaying over a number of years
20
Q
Insurance
A
- insurance companies + banks provide insurance policies that cover long term risks
- e.g. for people who buy their own home can insure the property and its contents against loss from a range of risks
- life assurance allows people to protect their loved ones in case they die, and some products enable people to save money for later stages in their life
21
Q
Why do people buy financial products?
A
- to satisfy their needs, wants and aspirations
- a decision to satisfy a need or wants and therefore to buy a financial product is based on internal and external factors
22
Q
What are internal factors
A
- factors that come from within people themselves - their own personal set of values, beliefs and attitudes
- values, beliefs and attitudes affect the way people manage their money
23
Q
Do internal factors change?
A
- may change with circumstances and as the person passes through the stages of the life cycle
- but not significantly, as beliefs and values tend to be fairly stable
24
Q
What is the impact of internal factors?
A
Values, beliefs and attitudes affect the way people manage their money
25
Q
What are values?
A
- general feelings or beliefs about desirable behaviour + goals
- they involve the concepts of ‘good’ and ‘bad’ + how people things ought to be
26
Q
What are the functions of values regarding buying financial products?
A
- they help people to distinguish between what they consider to be needs and what they consider to be wants, and to form their aspirations
- they help people to plan their finances and to decide between different alternatives
27
Q
Examples of how values alter financial decisions?
A
- young people live in the present - they don’t know what they want to do when they leave school and spend all their money every week on going out, clothes etc
- other people believe in planning for the future - want to go to uni or start a business - aware this is expensive + save most of their money towards this longer term goal
28
Q
What are beliefs?
A
- more specific + detailed than values
- they are less about the way that people think things are supposed to be and more about the way they think they are
- beliefs can be religious but can also include beliefs in, for example free speech, enterprise or fairness
29
Q
What are the two types of beliefs?
A
- ‘absolute’ beliefs - ‘it’s acceptable to charge a reasonable amount of interest on a loan but it’s not acceptable to charge too much’
- ‘casual’ beliefs - they explain how one event causes another event happen - ‘if interest rates rise, people will borrow less’
30
Q
How do beliefs change how people view financial services?
A
- banks have had a poor reputation since the financial crisis that began in 2007 + some people may not trust them anymore
- they might believe that banks will crash again + this would make them wary of saving their money in a bank account
31
Q
What are attitudes?
A
- refer to how, at a given time and place, people think and feel about another person, or event or an issue
- attitudes are usually limited to socially significant issues or events + are usually quite general rather than specific
32
Q
How can attitudes be changed?
A
- they can be changed by circumstances, events, experience or advice -> someone’s attitude to children may change when they have their own
- other attitudes may be deeply embedded + therefore resistant to change
- sometime people have no attitude towards something + this is neutral attitude
