Personal finance: Life cycle aproach

Finance & Accounting
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PERSONAL FINANCE: LIFE CYCLE APPROACH Name: Instructor: Task: Date: Personal Finance: Life Cycle Approach Life Cycle model presents critical concepts that aid in explaining consumer spending and saving modes. Understanding consumers’ purchase patterns helps the business in developing effective strategies that ensure maximum utilization and exploration of the target group.


However, understanding customers’ habit may be challenging since auxiliary issues adjusts such patterns. Therefore, this script examines the life cycle approach and its usefulness when understanding consumer patterns. Furthermore, it deduces the lessons arising from such patterns. Life cycle approach centers on personal spending and savings in an individual’s livelihood. Customers present dynamic habits influenced by the preferences at each level of life. Normally, personal finances are low at young age; however, they increase with career’s achievement and drop with retirement. Although deviations may occur, consumption responds to forces emanating from such variants. Indeed, consumption may fail to vary with transient changes in earnings but contemporary preferences and future expectations define habits (Gitman, Joehnk, & Billingsley 2011). Consequently, individuals at young stages exude high borrowing rates tagged against their future incomes to counterbalance debt and minimize the fissure between utilization and earnings. Additionally, the group exudes heterogeneous spending patterns. As such, a young group seizes few liquid assets since it tries to become stable. ...
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