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WHAT IS A PERSONAL FINANICAL LIFE CYCLEPersonal Life CycleDef This is a cycle that reflects the changes you go through during your life and helps you adjust your financial needs at each stage of the cycleAs you grow older your financial needs change. Understanding and planning for these changes areImportant. For example, when you are young you are dependant on your family. You have a fewsource of income and most of your needs are meet by general household expenditure and most ofyour personal income is discretionary. When you leave school, you become more financial dependant. Your source of income will increase you may even have other people in your life beingfinancially dependent on you.Financial Planning is an important skill and ongoing process. The benefit of planning is to make surethat you are prepare for each of the life stages. Every person has a financial need and it differ fromperson to person. There is no perfect plan as everyone is different and every one journey in life is differentWHEN TO PLAN AND WHAT TO PLAN FORBirth to TeensDuring this stage you would have very little concept of money, budgeting, saving or planning. Youare mostly dependant on your parents/guardian. In your TeensIn your younger teens you are still dependent on your parents/guardians. You may start doing work, saving some money. With out realising you have started financial planning. As you go through youteens you start to prepare for your career and adult life. some financial concern will beFull time education and careerIncome from part time employmentConsidering future financial needs and resourcesIn your TwentiesNow you start to gain financial independence and gain secure employment. Here you will have a high level of disposable income and discretionary spending due to not having any family commitments. You will probable thinking of the followingFinishing education- Starting employmentStart being more financially independent- Repaying a student loanBuilding up regular savings- Buying a houseIn your ThirtiesAt this stage you are more likely to have more family and household commitments. You will probably have bought a house at this stage so will be repaying back a mortgage. At this stage there is a high level of risk and responsibility so having insurance is important. It is also a good time to be thinking about retirement goals and pension needs. People in this stage are thinking aboutIncreasing their income- Paying a mortgage/RentSaving (Emergency fund)- Life AssuranceChildren’s educational costs- PensionIn your fortiesPeople who have children in this stage will see increased spending on current and future educational needs. It they can afford it they may have investment. Health insurance and pension planning become very important as they get older. People at this stage are thinking about Children’s education- InvestmentsRetirement plans- Life AssuranceMaking a willWillDef This is a legal document containing instructions for what should be done with personal money and property after deathIn your sixtiesAt Retirement ................
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