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Personal Financial Life Cycle Plan: Understanding Financial Needs and Sources

Learn about the different financial needs at different life stages, create a personal financial life cycle plan, and understand where the finance will come from. Revisit goals and adapt your plan accordingly.

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Personal Financial Life Cycle Plan: Understanding Financial Needs and Sources

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  1. Learning Intentions At the end of this unit I will: • Know the different financial needs at different life stages • Understand where the finance will come from at different life stages • Be able to create a personal financial life cycle plan • Know the value of a personal financial life cycle plan

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  3. BEFORE WE BEGIN #04AFEF Do this exercise individually or in pairs. Tick whether you agree or disagree with the statements. Revisit it after the unit to see if you have changed your mind about any of them.

  4. ‘3Ts’ = Turn, Think, Talk • What are your goals? • Might your goals change during your lifetime? Why? • What impact might these changes have on your finances? Wonderful Worthwhile Websites www.mymoneysense.com www.careersportal.ie

  5. Setting Goals Goals should be SMART. • Specific– use precise language to describe the goal. • Measurable– be able to confirm that the goal has been achieved. • Attainable– it must be possible to achieve the goal. • Relevant– aim for something that is worth achieving. • Time-bound– set a specific time frame for achieving the goal.

  6. Time to think Write down a short-term goal that you hope to achieve this year. Answer the following questions about your goal: • Have you stated exactly what you want to achieve? • How will you know when you have reached your goal? • Is it possible for you to achieve this goal? • Is it a good goal for you at this moment in your life? • What is your deadline for achieving this goal? If the answer to any of these questions is ‘no’ or ‘don’t know’, perhaps you should rethink and redraft your goal.

  7. CASE STUDY YOUR FINANCIAL LIFE CYCLE Read the case study on page 40 of the text book.

  8. What is a Personal Financial Life Cycle Plan? A personal financial life cycle plan presents your needs and wants at each stage of your life and matches them with sources of finance.

  9. Create a Personal Financial Life Cycle Plan Divide your personal financial life cycle plan into fivebroad stages: • Dependence stage – you are dependent on parents or guardians. • Independence stage – you can finance yourself. • Emerging stage – you can also finance others, e.g. your family. • Pre-retirement stage – you are building up your finances again. • Retirement stage – you are spending your finances.

  10. Time to think Elaborate on what happens at each stage: • List your needs (what you need to survive) and your wants (things that you would like to have) for each of the stages. • Note where you might receive the income or finance to pay for what you need and want at the various stages. Be decisive! You will find ideas and suggestions for each stage in the text book.

  11. WORKING WITH OTHERS #04AFEF Working in groups, complete a Personal Financial Plan for a fictitious student. Each group should take a stage and fill in their part of the table. Page 44

  12. 1.2 PERSONAL FINANCIAL LIFE CYCLE • At what stage in the Personal Financial Life Cycle do you also finance others? Quick Quiz Independence stage Pre-retirement stage Emerging stage

  13. 1.2 PERSONAL FINANCIAL LIFE CYCLE • At what stage in the Personal Financial Life Cycle do you also finance others? Quick Quiz Independence stage Pre-retirement stage Emerging stage

  14. 1.2 PERSONAL FINANCIAL LIFE CYCLE • At what stage in the Personal Financial Life Cycle do you also finance others? Quick Quiz Independence stage Pre-retirement stage Emerging stage

  15. 1.2 PERSONAL FINANCIAL LIFE CYCLE • At what stage in the Personal Financial Life Cycle do you also finance others? Quick Quiz Independence stage Pre-retirement stage Emerging stage

  16. 1.2 PERSONAL FINANCIAL LIFE CYCLE • The independence stage is where you can finance yourself. Quick Quiz: Review • The emerging stage is where you can finance others, e.g. your family. • The pre-retirement stage is where you are building up your finances again.

  17. CHECKING IN • What is a personal financial life cycle plan? • What are the five main stages in a personal financial life cycle plan? • Why might you revisit your personal financial life cycle plan at regular intervals?

  18. Time to think Are you ready to create your own plan? Prepare a visual for how it might look and then start writing. You will then develop your plan as you study different concepts in this book.

  19. 1.3 PERSONAL FINANCIAL LIFE CYCLE

  20. 1.3 PERSONAL FINANCIAL LIFE CYCLE Do a Role Play In groups of four, prepare a personal financial life cycle plan. Each member of the group plays one of four roles: • Post-primary student • Third-level student • Full-time employee • Pensioner State your needs and wants and explain how you will finance them.

  21. APR • Personal financial life cycle plan • Dependence stage • Pre-retirement stage • Emerging stage • Retirement stage • Entrepreneur • Sources of finance • Independence stage • SMART • Jobseeker’s allowance • Loan • Pension

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