T2 Personal Life Cycle Flashcards
Patterns with the life cycle
- in early stages of life, children are dependent on parents for money, shelter, food and clothing
- they may be given pocket money
- in adulthood individuals are usually independent
Birth and infant
Parents pay for everything
Preschool childhood
Relatives/ parents may save money for the child
Early childhood
5-12
Parents still pay for everything, May receive pocket money
Teenager
- 13-19
- still reliant on parents, but may have part time job
Young adult
- 18-25
- leave home - work, uni
- responsible for own expenditure and income
Mature adult
- 26-40
- earnings may increase
- borrow to buy a house
- life assurance
- pay for wedding
- children
Middle age to late middle age
- 41-60
- pay off debts
- dependents leave home
- may be redundant
- possible early retirement
Old age/ retirement
- 65 +
- retired, possible part time job, leisure interest + hobbies
- income from state pension + other pension arrangements
- may need to pay for care home if in poor healthy
Death
- at any time
- make arrangements agreements for their funeral, make a will
- people may buy life assurance policy to repay debts and pay money to their dependants when they die
- May prepay funeral
What is a need?
An essential item - shelter, clothing, food, water
What is a want?
Something that is desirable but optional
What are aspirations?
Items or experiences people wish to have in the future - e.g. owning a car
What factor affect life events within the life cycle?
- location
- income
- health
- status
Location
- decision when to leave full time education will vary from country to country
- opportunities for work will vary
Income
- individuals income may depend on the family they were born into
- a lack of income may impact timings of certain life events
- e.g. when someone leaves home, getting married or having children
Health
- people who suffer from health problems may have a shorter life expectancy than others
- May become dependent on other financially
Unforeseen circumstances examples
- winning the lottery
- promotion at work
- travelling
- breakdown of relationships
Attitudes to financial risks?
- as people get older they might consider:
- risk to their family if they die - may lead them to take out life assurance cover
- the risk of poor health so a person make take out private health insurance
Attitude to risk words
- risk averse = individuals are reluctant to take on rils and so may be reluctant to borrow money for fear of not being able to pay it back
- risk tolerant = more willing to to take a risk
Social influences on length of life cycle
- demographic changes - ageing population
- people will have to financially plan for longer retirement
- increase in single parent + single person household May mean high financial burdens for these people
- women live longer - so need to provide more for retirement
Economic factors that influence life cycle
- state of the economy
- a recession -> average incomes falling + unemployment rising
- boom -> average income rising, unemployment falling
- changes in employment patterns -> increased career mobility gives more employment opportunities
- increased number of older people in employment
Order of wants, needs and aspirations?
- needs
- spare income = wants and aspirations
Status
- social status and age status may affect life events in the future
- e.g. divorce or death
What are socio-economic trends?
- outside the control of the individual and can impact their life events
- e.g. interest rates, demographic changes
