unit 2-F

• Needs


  Essential 'must have'
• Wants


  Optional 'nice-to-have' that are desirable but not essential
• Aspirations


  Hopes for the future, that people wish to have in the medium and long term
• Needs, wants and aspirations change over time
• Factors that influence changes in needs, wants and aspirations

  • Lifestyle
  • Size of family
  • Ability to afford products
  • Prevailing culture of society
• Needs, wants and aspirations at different life stages

  • (0-2 years old) need warmth and food, want love and attention
  • (13-19 years old) need warmth and food, want clothes, attention and social interaction
  • (26-40 years old) children's needs might take priority, want a bigger home and material goods
  • (66 onwards) need care, help and support, want safety and security
• Aspirations become more realistic as people learn more about life
• Ways to satisfy needs, wants and aspirations

  • Medium and long-term savings
  • Investments
  • Pensions
  • Longer-term borrowing
  • Insurance
• Medium and long-term savings

  Financial products that allow people to save over a longer period to cover future needs, wants and aspirations
• Investments


  Longer-term form of savings that are riskier but have a higher return
• Pensions


  Money saved throughout working lives to finance retirement
• Longer-term borrowing


  Borrowing money to finance a large purchase, paid back over a longer period (e.g. mortgage, hire purchase)
• Insurance


  Policies that cover long-term risk (e.g. property and contents insurance)
• Internal factors that influence needs, wants and aspirations

  • Values
  • Beliefs
  • Attitudes
• Values


  General feelings or beliefs about desirable behaviour and goals
• Functions of values


  • Help distinguish between needs and wants
  • Help plan finances and decide between alternatives
• Beliefs


  More specific and detailed than values, can be religious or about concepts like free speech and fairness
• Attitudes


  How people think and feel about another person, event or issue at a given time and place
• External factors that influence needs, wants and aspirations

  • Marketing and advertising
  • Peer pressure
  • Trends, fashion and role models
• Marketing


  Activities a company undertakes to promote the buying and selling of a product or service
• Peer pressure


  The feeling of wanting to fit in, particularly important for young people
• Culture


  What society considers to be acceptable or unacceptable, can influence financial behaviour and product success
• Before, mortgages were not seen as acceptable due to fear of debt, but now are seen as acceptable in the UK due to a strong sense of home ownership
• Ways personal values influence financial decisions

  • Ethical investing
  • Managing finance
  • Religious beliefs
• Ethical investing


  Choosing to save in a way that means the money will be used for what the individual considers to be good purposes
• Managing finance

  Financial choices affected by attitudes to risk and reward
• Religious beliefs


  Islamic law (Sharia law) prohibits the payment of interest on debt
• Affordability is a very important concept in helping people choose financial products
• Things to consider when assessing affordability

  • Setting priorities
  • Attitudes to risks