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New JC Fin Lif Cycle
New JC Business Studies Your Financial Life Cycle
| Question | Answer |
|---|---|
| Why is managing your finances important? | 1.Grow income 2.Wise purchasing 3.Protect savings 4.Use banks 5.Borrow wisely 6.Use insurance 7.Understand taxes 8.Achieve financial security |
| Financial life cycle | A series of stages which most people pass through during their lives. Each stage is different in terms of financial goals, income, spending and risk. |
| Childhood (0-12) | -you live at home -food, clothing, shelter is provided for you -you may receive pocket money, gifts (no income) -usually no financial worries |
| Teenage and young adult (13-20) | -you live at home -food, clothing, shelter is provided for you -you may receive pocket money, gifts (no income), odd jobs, summer jobs or some part-time work (some income) |
| Starting a career (20-30) | -Full time job -earning own income -paying income tax -With your own income you can: -buy your own clothes -buy your own car -save for a holiday -buy things you want -move out of home -pay rent -paying household bills -paying for food |
| Setting up a new home (25-35) | -buying a home -getting married -decorating the new home, furniture, appliances etc… -insurance against fire and other risks. -all this means increased spending and managing your income wisely |
| Growing a career and family (30-65) | Children means new expenses: -food, clothing, education, entertainment -expensive time but people earn the most income -children grow up and move out of the family home/financial burden on parents eases and have more money to spend on themselves |
| Retirement (65+) | between 60 and 70 most people retire from work-This means an end to earning but not to spending -this is why people have pensions |
| Pension | Financial products that pay out money to people who have retired from work. People have to pay regularly (contributions) into this financial product during their working life. |
| Insurance | A means of protection from financial loss. It is a form of risk management. |
| Explain benefits of managing your personal finances. | Protect your savings, grow your income, manage your spending and make wise purchases, reduce your financial risk, provide financial security, plan for retirement, borrow wisely. |
| List sources of finance a person could have at different stages of their life. | Pocket money-Income from doing odd jobs-Money received as a gift-Income from parttime job-Fulltime wage / salary-Profits from own business-Child benefit-Social welfare-Pension-Interest earned on savings-Profits from investments |
| List the main stages of a typical personal life cycle. | • Childhood (0-12) • Teenage Years (13-20) • Starting a career (Typically 20-30) • Setting up a new home and getting married (Typically 25-35) • Growing a career and family (Typically 30-65) • Retirement (Typically from 65 onwards) |
| List two potential sources of income people can have when they start their career. | • Wages, salary • Profits from their own business |
Created by:
MrFromholz
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