Topic 2 - The Personal Life Cycle

Question 1

What is a personal life cycle?

Answer 1

different stages of life

Question 2

what are the 7 different stages of a life cycle?

Answer 2

• birth and infant hood
• childhood
• teenager
• adult
• middle aged
• retired
• death

Question 3

what could change as you go through these changes?

Answer 3

• levels and patterns of spending
• income
• amount of savings and attitude towards savings
• amount of debt and attitude toward debt
• attitude to risk
• life event

Question 4

3 reasons why people spend money?

Answer 4

• to pay for essential items they need
• to pay for optional items they want
• to save for items they aspire to buy in the future

Question 5

What factors affect life events within the life cycle for different people?

Answer 5

• location
• income
• health
• status

Question 6

how can location have an affect on the personal life cycle?

Answer 6

• when you leaving full time education (different in different countries)
• opportunities for work

Question 7

how can income have an affect on the personal life cycle?

Answer 7

• can be dependent on the family they’re born into
• delay the time someone can leave home
• delay getting married or having children

Question 8

how can health have an affect on the personal life cycle?

Answer 8

may have a shorter life expectancy than others
- could lead to being financially dependent on others

Question 9

what are unforeseen circumstances that can have an affect on the personal life cycle?

Answer 9

• winning the lottery
• promotion at work
• travelling
• breakdown of relationships

Question 10

What are the 4 different types of attitudes to risk?

Answer 10

• physical risk
• emotional risk
• risk to reputation
• financial risk

Question 11

how do attitudes to financial risk relate to the life cycle?

Answer 11

• the risk to family if they day could cause them to take out a life assurance cover
• the risk of poor health so an individual may take out private health insurance

Question 12

what does it mean to be risk averse?

Answer 12

individuals are reluctant to take on risk and so may be reluctant to borrow money for fear of not being able to pay it back

Question 13

what does it mean to be risk tolerant?

Answer 13

That you are okay about risks thus more willing to take on

Question 14

what are external influences on the length of various stages of the life cycle and what happens within them? (PESTLE)

Answer 14

Political
Economical
Social
Technological
Legal
Environmental