Topic 1 - Needs wants and aspirations. Flashcards
What is a need?
Essential items that everyone must have to survive
what are wants?
Optional, nice-to-have items that are desirable but not essential
- wants cannot be fulfilled until needs have been accounted for
what determines ones needs and wants
the price of products and peoples ability to buy them
what is an aspiration?
hopes for the future
- items or experiences that people wish to have in the medium or long term future
How do peoples needs wants and aspirations change over the life cycle?(3)
- needs don’t change much over time however what’s important to someone could change.
- wants may change to become more realistic
- some aspirations may be met allowing new ones to be made.
Why might ones needs change through the life cycle?(4)
- lifestyle
- prevailing culture of the society in which they live
- the size of their family
- their ability to afford products
How could one satisfy their needs wants and aspirations?(5)
They must be able to finance them.
this may be through:
- medium and long term savings
- investments
- pensions
- long term borrowing
- insurance
What are Medium-term and longer-term savings? (2)
- financial products that allow people to save over a longer period, more than 3 years.
- this will cover future needs and wants and allow people to fulfill their aspirations.
What are investments?
Longer term form of savings
- for a long term want or aspirations
- more risky than savings but can bring higher return.
What are pensions?
People save money in a pensions scheme through their working,Ives to finance their retirement
What is longer term borrowing?
- to finance a large purchase that must be paid back over a long period of time, otherwise it would be unaffordable
- such as mortgages
What is a hire purchase?
Secured consumer credit to finance items that involves the borrower repaying over a number of years.
What is long term insurance?
Insurance companies and banks provide insurance policies that cover long term risks.
What is life assurance?
Allows people to protect their loved ones in case they die
What is a financial product?
Products that enable them to satisfy their needs, wants and aspirations.
- not products that people get pleasure from having them directly
What is an internal factor?
Those that come from people within themselves:
- affecting someones choices is their own personal set of values, beliefs and attitudes
-affecting the way people manage their money.
What are values?
General feelings or beliefs about desirable behaviour and goals.
- involve the concepts of good and bad and how people thing things should be
What are the two important functions values fulfil to buying financial products?
- they help to distinguish between what they consider needs and wants to form their aspirations.
- they help people to plan their finances and to decide between different alternatives.
What are beliefs?
Not about the way people thing things should be but how they think things are
- can influence the way people see financial services and the firms that provide them.
How may beliefs be described as?
Absolute or casual
What are attitudes?
At a given time and place, people think and feel about another person, an event or an issue
- usually limited to socially significant issues or events and are usually quite general than specific.
How can attitudes be affected? (4)
By circumstances, events, experiences or advice.
What is a neutral attitude?
Having no attitude towards something
What are perceptions?
Representation of peoples understanding of the world around them.
What are preferences?
When people prefer particular products, usually dependant lm their personal values, beliefs and attitudes
What external factors influence needs wants and aspirations? (3)
- marketing and advertising
- peer pressure
- trends, fashion and role models
What is marketing?
- activities a company undertakes go promote the buying and selling of a product or service.
What is promotion? (1+3)
Paid for marketing activities that aim to:
- communicate with people
- inform them of goods and services
- persuade them to buy
What are public relations? (3)
- known as ‘below the line’ expenditure.
- advertising not paid for directly but keeps business products in the public eye.
- implicit form of advertisement.
What is product placement or sponsorship?
Aspects of PR that involve a product appearing on a programme of sorts. Or around a stadium for e.g.
What is peer pressure?
Pressure from people around you to conform to things that can blur rationality
What are trends and role models?
- tell us about attitudes and values that people can hold and influence the decisions and choices they make
What are some examples of financial trends? (3)
- the way people pay for goods and services
- peoples attitudes to saving
- how people view using credit
What is a role model?
Someone we look up to and try to be like.
What is culture?
About social norms, about behaviour and attitudes across social groups.
- indicated what is acceptable and unacceptable in a society
What is a large cultural norm in the UK but perhaps not other countries?
Owning a home.
What effects personal values on individual behaviour and decisions? 5
- feedback and expectations
- personal values on financial decisions.
- affordability
- setting priority’s
- attitudes to risk
what are some examples of expectation led events?
- expecting share prices to fall cause people to sell shares creating a fall in price
- interest rates expected to rise will.P
