Topic 2 - The personal life cycle Flashcards
How can income influence a person’s life events?
The amount of money someone has from earnings, benefits, pensions and other sources, as well as the financial circumstances of their family can influence the options they have at different life stages.
How does health influences a person’s life cycle?
People who suffer from long term health or disabilities may have a shorter life expectancy than others.
How can someone’s status influence their life events?
Social status changes due to age and the life events they experience.
How can unforeseen circumstances influence life events?
A person can be affected by all kinds of unforeseen events. This can be positive, for example and unexpected inheritance or work promotion. It can also be negative, like the death of a relative.
How can someone’s location affect their life events?
Where a person lives can influence their life events, such as full-time education or working.
Define needs.
Items people must have to survive e.g food, drink, shelter.
Define wants
Optional items that one desires but are not necessary.
What are aspirations?
Items or experience people wish to have in the future
Describe what is meant by physical risks.
Physical risks involve hazardous sports and activities, such as bungee jumping. This can also include subtle risks such as drinking alcohol or smoking.
Explain why some people are willing to take greater risks with their personal safety more than others.
This can be linked to life stage, where younger people are more willing to take risks than older people due to their physical fitness, and the fact that they have no dependents.
Describe what is meant by emotional risk?
Trusting others, such as friends, spouses and partners, where a person can risk betrayal or being hurt by them.
Describe what is meant by reputational risk?
Damage that can occur when someone fails to meet expectations of stakeholders.
e.g borrowing money and not repaying it on, which could affect how much money the person can borrow later on.
What is meant by financial risk?
Possibility of losing money by putting it into investments, gambling etc
How does attitude to financial risk relate to the life cycle?
People’s attitude can be influenced by the stage in the life cycle that they’re in. For example, older people can suffer from poor health, so paying for health insurance may be more important for them than for younger people.
What are the typical life events that would occur at the young adult stage of the life cycle?
- moving away from home
- going to university / training
- gaining qualifications
- starting a full-time job
Describe the financial responsibilities that a young adult would have.
- paying bills e.g rent, food and travel
- may need a student loans to support further education
Name some external influences on the life cycle.
- interest rates
- social trends
- economic trends
- trends in life expectancy
- changes in employment patterns and lifelong learning
Describe what is meant by the Bank rate and how it can have an influence on the life cycle.
The Bank rate affect the percentage that financial providers can offer on their savings and borrowing products.
If the bank rate is low, borrowing becomes cheaper, and savers receive low returns on savings. This can impact people’s ability to save for aspirations or borrow money.
Explain what is meant by social trends.
Demographic changes, which means changes to population size through births, deaths and migration. This also includes changing attitudes and habits to work, marriage and debt.
Explain what is meant by economic trends and how they can influence the life cycle.
Economic booms and recessions.
A poor economic situation can encourage people to migrate in search for better job opportunities and higher standards of living.
Explain how trends in life expectancy influence the life cycle.
Trends in life expectancy impact retirement age and how long a person’s retirement stage lasts. A longer life expectancy means people are more likely to retire for a longer period of time.
What is the state pensions age?
65-66 for both men and women. This will increase to 67 by 2028 and 68 by 2048.
Who funds state pensions?
The government funds the state pension from NI contributions and taxes.
How can changes in employment patterns and lifelong learning influence the life cycle?
Access to higher levels of education gives people more opportunities to get better jobs and more career mobility. This also means people can be more flexible and take on different roles throughout their careers.
