Topic 2 - The personal life cycle

Question 1

How can income influence a person’s life events?

Answer 1

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.

Question 2

How does health influences a person’s life cycle?

Answer 2

People who suffer from long term health or disabilities may have a shorter life expectancy than others.

Question 3

How can someone’s status influence their life events?

Answer 3

Social status changes due to age and the life events they experience.

Question 4

How can unforeseen circumstances influence life events?

Answer 4

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.

Question 5

How can someone’s location affect their life events?

Answer 5

Where a person lives can influence their life events, such as full-time education or working.

Question 6

Define needs.

Answer 6

Items people must have to survive e.g food, drink, shelter.

Question 7

Define wants

Answer 7

Optional items that one desires but are not necessary.

Question 8

What are aspirations?

Answer 8

Items or experience people wish to have in the future

Question 9

Describe what is meant by physical risks.

Answer 9

Physical risks involve hazardous sports and activities, such as bungee jumping. This can also include subtle risks such as drinking alcohol or smoking.

Question 10

Explain why some people are willing to take greater risks with their personal safety more than others.

Answer 10

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.

Question 11

Describe what is meant by emotional risk?

Answer 11

Trusting others, such as friends, spouses and partners, where a person can risk betrayal or being hurt by them.

Question 12

Describe what is meant by reputational risk?

Answer 12

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.

Question 13

What is meant by financial risk?

Answer 13

Possibility of losing money by putting it into investments, gambling etc

Question 14

How does attitude to financial risk relate to the life cycle?

Answer 14

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.

Question 15

What are the typical life events that would occur at the young adult stage of the life cycle?

Answer 15

• moving away from home
• going to university / training
• gaining qualifications
• starting a full-time job

Question 16

Describe the financial responsibilities that a young adult would have.

Answer 16

• paying bills e.g rent, food and travel
• may need a student loans to support further education

Question 17

Name some external influences on the life cycle.

Answer 17

• interest rates
• social trends
• economic trends
• trends in life expectancy
• changes in employment patterns and lifelong learning

Question 18

Describe what is meant by the Bank rate and how it can have an influence on the life cycle.

Answer 18

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.

Question 19

Explain what is meant by social trends.

Answer 19

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.

Question 20

Explain what is meant by economic trends and how they can influence the life cycle.

Answer 20

Economic booms and recessions.
A poor economic situation can encourage people to migrate in search for better job opportunities and higher standards of living.

Question 21

Explain how trends in life expectancy influence the life cycle.

Answer 21

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.

Question 22

What is the state pensions age?

Answer 22

65-66 for both men and women. This will increase to 67 by 2028 and 68 by 2048.

Question 23

Who funds state pensions?

Answer 23

The government funds the state pension from NI contributions and taxes.

Question 24

How can changes in employment patterns and lifelong learning influence the life cycle?

Answer 24

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.