Chapter 11 - Financial Planning for Your Future

• Personal finanical cycle


  Shows the changing financial needs of a person at each stage of their life
• Stages of financial life cycle

  Dependance

  Independance

  Developing

  Pre-retirement

  Retirement
• Estate


  everything that a person owns
• Factors that impact financial planning

  -Employment status

  -Age

  -Number of dependants

  -Health status

  -Economic outlook (eg. inflation)

  -Marital status
• Dependance stage (children)


  Dependant on parents for financial needs
• Dependence stage (teens) key financial concerns


  -Full-time education and preparation for career

  -Income from part-time job

  -Considering future financial needs
• Independance stage


  People have greater personal income and more exependiture
• People in independence stage consider...

  -Finishing their eductation

  -Starting work and building wealth

  -Starting a pension

  -Repaying student loans

  -Becoming financially independent

  -Beginning regular savings
• Pension


  Fun into which payments are made during a person's working life, and from which payments are later made to support them when they retire.
• Developing stage


  More family and household commitments. Need extra household income. Usually have higher salary
• People in developing stage consider...


  -Increasing income

  -Pension

  -Paying mortgage/rent

  -Personal savings/creating emergency fund

  -Household insurance

  -Life assurance
• Pre-retirement stage


  Near top of the salary scale. Often have older children and spending on education for third level is likely. Health insurance and pension planning become more important
• People in pre-retirement stage consider..


  -Children's third-level education

  -Savings

  -Life assurance

  -Paying off mortgage

  -Updating retirement plans

  -Making a will
• Retirement stage


  Living off of pension. Will have repaid mortgage and may consider downsizing to top up income.
• People of retirement age consider...


  -Children's third-level education

  -Pension

  -Health insurance

  -Life assurance

  -Inheritance planning

  -Checking will contents
• People who have retired consider..


  -Finalising wills

  -Considering what care needs they might have

  -Living off saved wealth