topic 1

• 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
• 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
• Internal factors that influence choices

  • Values
  • Beliefs
  • Attitudes
  • Perception
  • Preferences
• External factors that influence choices

  • 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 and unacceptable, modern societies have a culture of consumerism
• Financial services are very interested in culture because it influences financial behaviour and what financial products will be successful
• Cultural changes in financial behaviour

  • Before, mortgages were not seen as acceptable due to fear of debt, now mortgages are seen as acceptable due to strong sense of home ownership in the UK
• 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


  A person's financial choices are affected by their attitude to risk and reward
• Islamic law (Sharia law) prohibits the payment of interest on debt, so Muslims are not allowed to borrow money via a Western-type mortgage or loan
• Affordability


  An important concept in helping people choose financial products, involves considering implications and responsibilities
• Things to consider when assessing affordability

  • Setting priorities
  • Attitudes to risks