Students will understand lifestyle conditions and typical incomes, needs, and expenses at various

stages of life.

2.01 Lifestyle Conditions

NOTE: When questions are asked on the PPT, use the class notes page for this objective to answer the questions.

ESSENTIAL QUESTIONS:What lifestyle

conditions may lead to economic challenges for individuals and families?

What are the stages of the financial, individual, and family life cycles?

What events and activities typically occur and bring financial needs at various stages of life?

What are typical career and income characteristics of people at various stages of life?

What are typical expenses of people at various stages of life?

Lifestyle Conditions

Influence financial planning during each stage of life.

Many lifestyle conditions lead to financial and economic challenges.

Individual Life CycleIndividuals move through a series of stages

called the Individual Life Cycle

Infant, youth, adolescence into adulthood Stages of adult life

Prime of life, middle age, senior years, twilight years

Each growth stage leads to different financial opportunities and challenges

Life Stages Affect Life Choices

Practical Application:Life Insurance professionals recognize the affect of life stages for insurance protection. Life Insurance protection is based on individual needs, incomes, and expenses.

Young & single - less coverage needed

Just married – May need more especially if purchasing home, etc.

New parents - need life insurance to protect financial future of dependent children

Planning for Retirement – long term planning and estate planning goals reviewed

and revised

Lifestyle Conditions

Age-a set of consecutive ages that tend to have similar incomes, needs, and expenses

Dependents- number of persons relying on a person for financial support (children, spouse, parents, other relatives)

Economic outlook- inflation/recession/depression, unemployment rate, interest rates

Education level- less than high school, high school diploma, associate’s degree, bachelor’s degree, master’s degree, doctorate

Employment status- employed, self-employed, unemployed; part-time, full-time

Health condition- chronic or debilitating illnesses, injuries, disabilities

Marital status- single, married, divorced, widowed

Financial Life CycleTypical progression of individuals/families

through stages of life Depicts ways money is used and wealth is

accumulated during these stages 1. First learn to protect wealth, then 2. Accumulate it, then3. Prepare to pass it onDecisions at each stage affect options at

the next stage

Key Element: Creating Your Own Plan

Family Life CycleFamilies also move

through a series of stages called the Family Life Cycle.

Each family unit is unique.

Families have different needs, wants, values, and priorities during the various stages, as well as different resources.

Stages of the family tend to parallel stages in the Individual Life Cycle.

Variations in Family Life Cycle

Individuals choose not to marry

Individuals whose spouses die or leave

Couples choose not to, or are unable to, have children

Families skip, overlap, or repeat stages, which creates new sequences

Families have additional children several years after first group of children

Families decide to adopt after their children are in launching stage.

Families are involved in second marriages; two families blend and stages are repeated

Families create extended families by bringing aging relatives into their homes

Variations in Family Life Conditions

What is your family’s lifestyle conditions?

How have these conditions affected your family’s economic and financial status.?

1. Ages2. Education levels3. Dependents4. Economic Outlook5. Employment status6. Health conditions 7. Marital status

Incomes, Needs, & ExpensesIncomes, needs, and expenses for

individuals and families vary at each stage of the life cycle.

Incomes tend to vary with age, level of education, and work experience.

Needs arise because of activities and events that occur.

Expenses tend to vary throughout life as life cycle needs produce financial needs.

Income -Compensation received from work (salary, commission, hourly wage), investing, inheritance What are annual earning for professional degree? What are annual earnings for associate degree? What are annual earnings for a high school dropout? How does unemployment rate compare on each?

Expenses – Costs of Living

On your class notes page for this objective: List 5 other items your family has to pay.

1. 2.3.4.5.

Examples:RentCar paymentsGroceriesMedical insurance &

services Taxes

Satisfying Needs and WantsWhat are needs?Things required in

order to live

What are wants?Things that add

comfort & pleasure to your life

How do you as a consumer satisfy your wants and needs?

HARD TIMESBrainstorm to identify several people you know

who have experienced financial “hard times”. Neighbor, friend, parents, family members?

What possible situations led to their “hard times”?

How does your knowledge of this neighbor or family member influence your future decision making?What poor decisions might have led them to “hard

times”?What circumstances are beyond their control?