The Personal Life Cycle Year 10 Economics Chapter 1- Money

Lesson Objectives To understand the personal life cycle- how peoples needs for spending, saving and borrowing change at key points in life. State the difference between needs and wants and how these change over the personal life cycle. Analyse how changes in income affect an individuals decisions.

Key Terms for Today’s Lesson Income- total money received from a person’s wages/salary, interest and dividends. Borrowing- Getting money from a lender that must be repaid in the future. Savings- Putting money aside for later use. Needs and wants- needs are essential to our lives but wants are things we could survive without.

What is the Personal Life Cycle Most people will experience leaving home, working, establishing their own families and retiring. This is known as the personal life cycle. Throughout this progression, incomes will change significantly: firstly when someone gets a job, and then as they advance their career. Retirement is likely to see income fall again. Needs and wants also change as circumstances change. At all stages of life, most people’s income will be limited compared with their needs and certainly their wants, and they will have to make a decisions. For each choice made their is an opportunity cost.

The Personal Life Cycle

Changes in Income Activities On leaving university, Nathan changed from spending money on parties to buying a house. His first house was very limited by what he could afford on a starting salary. As he got promotions, he could afford a wider selection of properties, more expensive holidays, clothes and so on. Activities In small groups, make lists of things that you consider to be “wants” for a teenager and those you think are “needs”. Explain whether Nathan’s habit of buying tailor-made suits is a “need” or a “want”. If Nathan goes on to become a millionaire, how might his “needs” and “wants” change.