T2 Personal Life Cycle

Question 1

Patterns with the life cycle

Answer 1

• 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

Question 2

Birth and infant

Answer 2

Parents pay for everything

Question 3

Preschool childhood

Answer 3

Relatives/ parents may save money for the child

Question 4

Early childhood

Answer 4

5-12
Parents still pay for everything, May receive pocket money

Question 5

Teenager

Answer 5

• 13-19
• still reliant on parents, but may have part time job

Question 6

Young adult

Answer 6

• 18-25
• leave home - work, uni
• responsible for own expenditure and income

Question 7

Mature adult

Answer 7

• 26-40
• earnings may increase
• borrow to buy a house
• life assurance
• pay for wedding
• children

Question 8

Middle age to late middle age

Answer 8

• 41-60
• pay off debts
• dependents leave home
• may be redundant
• possible early retirement

Question 9

Old age/ retirement

Answer 9

• 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

Question 10

Death

Answer 10

• 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

Question 11

What is a need?

Answer 11

An essential item - shelter, clothing, food, water

Question 12

What is a want?

Answer 12

Something that is desirable but optional

Question 13

What are aspirations?

Answer 13

Items or experiences people wish to have in the future - e.g. owning a car

Question 14

What factor affect life events within the life cycle?

Answer 14

• location
• income
• health
• status

Question 15

Location

Answer 15

• decision when to leave full time education will vary from country to country
• opportunities for work will vary

Question 16

Income

Answer 16

• 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

Question 17

Health

Answer 17

• people who suffer from health problems may have a shorter life expectancy than others
• May become dependent on other financially

Question 18

Unforeseen circumstances examples

Answer 18

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

Question 19

Attitudes to financial risks?

Answer 19

• 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

Question 20

Attitude to risk words

Answer 20

• 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

Question 21

Social influences on length of life cycle

Answer 21

• 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

Question 22

Economic factors that influence life cycle

Answer 22

• 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

Question 23

Order of wants, needs and aspirations?

Answer 23

• needs
• spare income = wants and aspirations

Question 24

Status

Answer 24

• social status and age status may affect life events in the future
• e.g. divorce or death

Question 25

What are socio-economic trends?

Answer 25

• outside the control of the individual and can impact their life events
• e.g. interest rates, demographic changes