How Income and Expenditure Change Over Your Life


A Personal Financial Lifecycle shows how a person’s income and expenditure are likely to change as they age. This is based on an ‘average’ person’s life and the expected demands at various stages including their varying needs and wants over a lifetime – the things you want now are not likely to be the same things you will want when you are 40 or 60! For example, you usually don’t need to get a mortgage to buy a house when you are a teenager, but you are much more likely to need a mortgage when you are older.


Other things that will vary over your lifetime include:


• The level of income you will receive usually increases as you age and develop new skills and experience in different areas.


• The sources of income also change from receiving pocket money to earning wages in a job, right through to receiving a pension when you retire.


• The levels of expenditure required to sustain your lifestyle at different stages of your life will increase as you age.


• For example, buying a house or apartment and raising a family tend to be the most expensive times for households.


In this chapter we will look at some potential needs and wants for people at different ages and stages of life. These may not apply to you, or you may have different ones. A person’s needs and wants may vary depending on traditions, beliefs or cultures, so the age ranges below are just a guide.


The Personal Financial Lifecycle can be broken up into 5 stages, as seen below:


Personal Financial Lifecycle


DEPENDENT INDEPENDENT DEVELOPMENT Up to 18


Age 19-29 Age 30-44 Age 45-65


RETIREMENT RETIREMENT 66+


PRE-


24 2


STRAND 1


CHAPTER 3: Personal financial lifecycle


LEVEL OF INCOME AND EXPENDITURE


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