1.4 Internal Factors That Influence Needs, Wants And Aspirations Flashcards
What are internal factors?
Factors that come from within people themselves
What is the key factor that affects someone’s choices?
Their own personal set of values, beliefs and attitudes.
These might change with circumstances or as the person passes through the stages of life cycle
Do values, beliefs and attitudes affect the way people manage their money?
Yes
Define values
General feelings or beliefs about desirable behaviour and goals.
Concepts of good and bad
Give the two important functions of values with regard to buying financial products
They help people to distinguish between what they consider to be needs and wants, and to form their aspirations.
They help people to plan their finances and to decide between different alternatives.
Do values help people to decide their general approach to financial matters?
Yes
What are beliefs?
Beliefs are more specific and detailed than values.
They are less about the way people think things ought to be and more about the way they think they are.
Give examples of beliefs
Religious
Free speech
Enterprise
Fairness
Name the types of beliefs
Absolute beliefs
Casual beliefs
What is a casual belief?
They explain how one event causes / makes another event happen
Eg ‘if interest rates rise, people will borrow less’
What can beliefs influence, in regards to finance?
Beliefs can influence the way people see financial services and the firms that provide them.
Eg banks have had a poor reputation since the financial crisis that began in 2007 -> not trusted
Define attitudes
Refer to how, at a given time and place, people think and feel about another person, event or issue.
They are usually limited to socially significant issues / events and are usually quite general, than specific.
What can cause changes in attitudes?
Circumstances
Events
Experience
Advice
Can people have an attitude that is resistant to change?
Yes, if it is deeply embedded
Can people have a neutral attitude?
Yes, they may have no opinion on a matter
Give a financial example of a changing attitude
Attitude to saving money for old age.
Young = not important.
As get older = more positive attitude to saving
What is attitude to risk?
Risk - the likelihood that a particular event will happen or that people might gain or lose from buying a financial product.
People have different attitudes towards this.
What are perceptions?
People’s perceptions represent their understanding of the world around them - social and physical environment.
How do people gain perceptions?
Sensory inputs - sight, sound, smell, touch, taste.
Non sensory inputs
What do perceptions affect, in regards to finance?
Perceptions affect the way they feel about…
Products with which they are surrounded.
Financial products that could help them to buy these products.
Banks and other financial institutions that provide these services.
What do people’s preferences depend on?
Personal values, beliefs and attitudes
How do personal preferences affect financial services?
Providers must offer services / products to suit all tastes
Give examples of personal financial preferences
Distribution channel they choose - operate in branch, phone, online, cheques, face to face
