1.4 Internal Factors That Influence Needs, Wants And Aspirations

Question 1

What are internal factors?

Answer 1

Factors that come from within people themselves

Question 2

What is the key factor that affects someone’s choices?

Answer 2

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

Question 3

Do values, beliefs and attitudes affect the way people manage their money?

Answer 3

Yes

Question 4

Define values

Answer 4

General feelings or beliefs about desirable behaviour and goals.
Concepts of good and bad

Question 5

Give the two important functions of values with regard to buying financial products

Answer 5

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.

Question 6

Do values help people to decide their general approach to financial matters?

Answer 6

Yes

Question 7

What are beliefs?

Answer 7

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.

Question 8

Give examples of beliefs

Answer 8

Religious
Free speech
Enterprise
Fairness

Question 9

Name the types of beliefs

Answer 9

Absolute beliefs

Casual beliefs

Question 10

What is a casual belief?

Answer 10

They explain how one event causes / makes another event happen
Eg ‘if interest rates rise, people will borrow less’

Question 11

What can beliefs influence, in regards to finance?

Answer 11

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

Question 12

Define attitudes

Answer 12

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.

Question 13

What can cause changes in attitudes?

Answer 13

Circumstances
Events
Experience
Advice

Question 14

Can people have an attitude that is resistant to change?

Answer 14

Yes, if it is deeply embedded

Question 15

Can people have a neutral attitude?

Answer 15

Yes, they may have no opinion on a matter

Question 16

Give a financial example of a changing attitude

Answer 16

Attitude to saving money for old age.
Young = not important.
As get older = more positive attitude to saving

Question 17

What is attitude to risk?

Answer 17

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.

Question 18

What are perceptions?

Answer 18

People’s perceptions represent their understanding of the world around them - social and physical environment.

Question 19

How do people gain perceptions?

Answer 19

Sensory inputs - sight, sound, smell, touch, taste.

Non sensory inputs

Question 20

What do perceptions affect, in regards to finance?

Answer 20

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.

Question 21

What do people’s preferences depend on?

Answer 21

Personal values, beliefs and attitudes

Question 22

How do personal preferences affect financial services?

Answer 22

Providers must offer services / products to suit all tastes

Question 23

Give examples of personal financial preferences

Answer 23

Distribution channel they choose - operate in branch, phone, online, cheques, face to face