Personal financial life cycle

Chapter 4
 Learning intentions

� Understand what a personal financial life cycle is and why it is

important

� Be able to construct a personal financial lifecycle

� Be able to identify the financial needs at each stage

� Come up with sources of finance to meet these needs

Warm up exercise

1. Who normally supplies you with money?

2. What do you spend your money on?
3. Now compare your use of money with how your
parents/grandparents used money
 What is a personal financial life cycle?
� A chart showing how the needs and sources of finance are matched at each stage
in the life cycle

� Personal financial life cycle planning is essential for each life stage

� There are 5 life Stages: 1. Reliance stage

2. Independent stage
3. Developing stage
4. Pre-retirement stage
5. Retirement stage
 Description of each stage

� Reliance= when people are still dependant on their parents/guardians

� Independent= when people can finance themselves

� Developing= finance themselves & take responsibility for a family

� Pre-retirement= when people are preparing for retirement

� Retirement= when people are retired

 Needs and wants
� Needs= things we need to survive e.g.

� Wants= things we would like to have but can live without e.g.

Sources of finance

� How we pay for our needs over the different stages of the life cycle
Stage 1. Reliance stage

� As a baby 0-1
� Toddler 2-5
� Primary School 6-12
� Secondary School 13-17
� Third Level 18-24

Think pair share- 4/5 needs and wants of those in this stage and
4 sources of finance
 Stage 1. Reliance stage

Needs and Wants:

Food, clothes, accommodation/shelter, medical costs, transport,
school books, phone, holidays

Sources of Finance:
Parents/guardians, child benefit-state aid, scholarships, wages from
part-time work
 Stage 2. Independent stage

� Starting work
� This includes those who leave school and do not continue in education
Needs and wants:
� Food, clothes, accommodation, medical costs, phone, transport,
entertainment

Source of finance:
� Wages/salary, job seekers allowance, borrowing
 Stage 3. Developing Stage
� Can finance themselves and take responsibility for a family
Needs and Wants
� Food, clothes, accommodation, medical costs, family, car expenses, insurance,
holidays

Sources of finance
� Wages/salary, job seekers allowance, child benefit, borrowing
 Stage 4. Pre-retirement Stage
� Established/ permanent position at work and thinking about life after
work

Needs and Wants:

� Food, clothes, accommodation, medical costs, car expenses, inventing
in pensions, holidays, presents

Sources of finance:
� Wages/salary, unemployment benefit
Stage 5. Retirement Stage
� Doing things unrelated to work

Needs and Wants:

� Food, clothes, car expenses, financial support for adult
children, entertainment, holidays

Sources of finance:
� Private/state pension
Todays Key Terms:
1. Personal financial life cycle
2. Need
3. Want
4. Reliance stage
5. Independent stage
6. Developing stage
7. Pre retirement stage
8. Retirement stage