FIGURE 5 Fixed and variable expenditures are different for everyone Entertainment 2pe E/ expenSes Clothing t ify ra Eating nsurance E School fees fixe club ie p N What do 1 Identify and list the four basic needs of human beings 2 List the four functions of money 3 Identify three characteristics of money 4 Give three examples each of variable expenditures and fixed expenditures. Variable expenditures Fixed expenditures 12UNIT TWO SPENDING AND SAVING INCOME
5 Describe how basic needs have changed over recent times. HOTac机s Write a 200-word response to the following statement: Responsible spending and saving habits will lead to a secure and successful financial future Luxury goods FIGURE 6 Spending patterns and factors which influence the need for saving The desire to purchase an expensive item, such as a new car, will often influence a person to budget and save more regularly. As consumers get older, change houses, develop new interests, or earn more, they may choose to upgrade these expensive items. Spending patterns and the need for saving are influenced by ○ Inco age ○ location wea TOPIC1 PERSONAL FINANCE 13
Income, spending and saving patterns The income a person earns can affect their spending and saving patterns. A certain minimum level of income is required to support a normal life. The unemployment benefit is paid to those who are unable to find work. It is intended to be enough to pay for basic needs while unemployed. People who earn low levels of income need to be more careful with their ending and can struggle to save. The concept of saving for a'rainy day is also important when looking at how much a person spends Accidents, repairs and What do you know? 1 Outline what influences people to budget and save money 2 Identify four changing factors that can influence people to upgrade expensive consumer items HoTactiities 1 Fill out the table. In the first column list five different types of clothing stores and in the second column identify and list the types of clothes they sell. Explain why different clothing stores sell different types of clothing Stores Clothes they sell 14UNIT TWO SPENDING AND SAVING INCOME
2 Explain the idea of saving for a'rainy day. purchasing opportunities are all part of our everyday life. The need to have money to respond to such demands is a part of responsible spending and saving High levels of income allow high levels of spending. People with high incomes can buy expensive grocery items and appliances, eat out regularly (and at high-priced restaurants), and live in costly houses in wealthy areas. they will generally have a better range of investments and retirement options open to them than people with lower income levels. Age, spending and saving patterns a person's age also influences their spending and saving patterns, Younger consumers usually spend most of their disposable income. Younger consumers with low incomes usually buy less-expensive products such as used cars. Young people living at home will also spend a lot on clothing, entertainment and leisure As younger consumers get older they will probably purchase higher-cost items- for example, holidays, new cars, and houses. As consumers age they are likely to spend more of their disposable income on travel and holidays. Some may look to future retirement by purchasing investment items. For older consumers most of the spending made on houses will be for repairs and maintenance. As purchases vary with age, businesses will target specific age groups or offer different versions of a product to different age groups. Volkswagen, like most Consumer purchasing timeline FIGURE 7 Bab youthTeendger young Adult older adulf Retiree omputer Car Clothe car ame DISC Holiday man Designer jewelle °use othes fitnes Health ↓ Mobile gear mallat h B。Hles rte one olid ear Small Use Health TOPIC1 PERSONAL FINANCE 15
car companies, provides different cars for different consumers. For example, the Polo is aimed at young singles or couples and the Passat is aimed at consumers with families. Financial institutions in particular attempt to build relationships with young consumers in order to encourage them to save for their future financial needs Location, spending and saving patterns Spending patterns are also influenced by where the consumer lives. In areas with expensive housing, products such as groceries and clothing are often also expensive This is due to higher rents for the store owners and the ability of the consumers to pay more In suburbs with lower house prices, and usually lower incomes, retail prices will usually be lower What do you know 1 Study Figure 7'Consumer purchasing timeline. Choose the young adult, older adult or retiree and suggest how they earn an income 2 List differences in the type of spending of a Year 8 student compared to a Year 12 student Year 8 student's spending Year 12 student's spending 3 Explain why prices in shops are more expensive in areas with higher-priced real estate 16 UNIT TWO SPENDING AND SAVING INCOME