C YCLES 2.01 Understand lifestyle conditions and typical incomes, needs, and expenses at various stages of life

F INANCIAL L IFE C YCLE

The typical progression of individuals/families through stages of life and ways in which they use money and accumulate wealth during these stages is depicted in the Financial Life Cycle

1 ST Learn to protect wealth, then accumulate it, then prepare to pass it on

D ECISIONS Decisions at each stage affect options at the next stage

I NDIVIDUAL L IFE C YCLE

Individuals move through a series of stages called the Individual Life Cycle as they move from adolescence into adulthood and then through the various stages of adult life. Each of these growth stages leads to different financial opportunities and challenges

F AMILY L IFE C YCLE

Families also move through a series of stages called the Family Life Cycle. Families tend to have different needs, wants, values, and priorities during the various stages, as well as different resources Stages of the family tend to parallel stages in the Individual Life Cycle

I NCOMES, N EEDS, AND E XPENSES AT EACH STAGE OF THE LIFE CYCLE

I NCOMES Incomes tend to vary with age and level of education and work experience

N EEDS Needs arise because of activities and events that occur at different stages of life

E XPENSES Expenses tend to vary throughout life as life cycle needs produce financial needs

L IFE C YCLES AND S TAGES

Stages in the Financial Life Cycle Stages in the Individual Life Cycle Stages in the Family Life Cycle High school student 13-17Son or daughter in a parenting family Stage 1: Basic Wealth Protection– Quit giving money to others (think carefully about spending); start job/career; form a family Young Adult Adult with or without children Adult with or without children Beginning family— newlyweds Child-bearing family— expanding Parenting family— developing Stage 2: Wealth Accumulation — Give money to yourself; peak earning years Midlife ages Pre-retirement Launching family—middle age Mid-years family Stage 3: Wealth Distribution—Live off accumulated wealth; give money to chosen ones (heirs) Retirement 65 and overAging family

V ARIATIONS IN THE FAMILY LIFE CYCLE

1. Individuals choose not to marry 2. Individuals whose spouses die or leave 3. Couples choose not to, or find they are unable to have children 4. Families skip, overlap, or repeat stages, which creates new sequences

V ARIATIONS IN THE FAMILY LIFE CYCLE CONTINUED 5. Families have additional children several years after first group of children 6. Families decide to adopt after their children are in launching stages 7. Families are involved in second marriages; two families blend and stages are repeated 8. Families create extended families by brining aging relatives into their homes