2.01 Lifestyle Conditions

1. 2.01 Lifestyle Conditions Students will understand lifestyle conditions and typical incomes, needs, and expenses at various stages of life. NOTE: When questions are asked on the PPT, use the class notes page for this objective to answer the questions.

2. 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?

3. Lifestyle Conditions • Influence financial planning during each stage of life. • Many lifestyle conditions lead to financial and economic challenges.

4. Individual Life Cycle • Individuals 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

5. 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

6. 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

7. Financial Life Cycle • Typical 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, then • 3. Prepare to pass it on • Decisions at each stage affect options at the next stage

8. Key Element: Creating Your Own Plan

9. Family Life Cycle • Families 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.

10. 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

11. Variations in Family Life Conditions What is your family’s lifestyle conditions? How have these conditions affected your family’s economic and financial status.? Ages Education levels Dependents Economic Outlook Employment status Health conditions Marital status

12. Incomes, Needs, & Expenses • Incomes, 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 financialneeds.

13. 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?

14. 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: • Rent • Car payments • Groceries • Medical insurance & services • Taxes

15. Satisfying Needs and Wants • What 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?

16. HARD TIMES • Brainstorm 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?