Financial planning follows a typical life cycle pattern for most individuals, consisting of three main stages: basic wealth protection when young, wealth accumulation during peak earning years, and wealth distribution during retirement. However, an individual's exact financial plan is unique and influenced by many personal factors like life events, goals, lifestyle conditions and needs that change over one's lifetime. Effective financial planning requires setting SMART goals and adapting one's plan in each stage of the financial life cycle.

1. Life Cycle of Financial
Planning
Take Charge of Your Finances

2. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
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Financial Planning
Financial planning is a tool used to
achieve financial success based upon the
development and implementation of
financial goals.
Many people follow a similar financial
pattern during their life
BUT
Everyone has an individualized financial
plan.

3. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
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Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
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Financial Plan Influences
Values,
Goals &
Personal
Choices
Major
Life
Events
Lifestyle
Condition
s
Life Cycle
Cycle
Needs
Financial planning
is influenced by
many factors:
These factors can
be expected and
unexpected.

4. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
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Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
Financial Goals
• Financial goals are specific
objectives to be accomplished
through financial planning
• Financial goals should be
SMART goals:
– Specific
– Measurable
– Attainable
– Realistic
– Time Bound
An essential
step to creating
a financial plan

5. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
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Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
SMART Financial Goals
• State exactly what is to be done with the money
involved.Specific
• Write the exact dollar amount.Measurable
• Determine how it can be reached, which is often
determined by the individual’s budget.Attainable
• Do not set the goal for something unattainable or
unrealistic.Realistic
• Specifically state when the goal needs to be
reached.Time Bound

6. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
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Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
Lifestyle Conditions
Marital status
Single, married, divorced,
widowed
Employment status
Employed, unemployed,
facing unemployment
Age
Age of all family
members
Number of
dependents
Children, spouse, parents,
other family
Economic outlook
Interest rates, employment
level, salary rates
Education
Education level of family
members, tuition needs for
children
Health status
Health of all family
members
Income
Amount of income

7. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
Slide # 7
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
• There is a typical life cycle pattern that
applies to most people
• Includes three stages
• The amount of time it takes to move through
the financial life cycle varies for every
individual
Financial Life Cycle
A life cycle is a series of stages in
which an individual passes during his
or her lifetime

8. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
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Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
An Individual’s Financial Life
Cycle
$
Approachin
g
Retirement
Years
Retirement YearsSingle * Marriage * Start and Raise
Family
0 20 30 40 50 60 70 80
Years of Age
Stage 1: Basic Wealth
Protection
Stage 3: Wealth
Distribution
Stage 2: Wealth
Accumulation

9. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
Slide # 9
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
An Individual’s Financial Life
Cycle
Stage 1: Basic Wealth Protection
In this stage, the individual should be focusing on
building financial security.
Stage 2: Wealth Accumulation
In this stage, the household head has reached peak
peak earning years, is accumulating wealth, and
approaching retirement.
Stage 3: Wealth Distribution
This stage involves the consumption of wealth,
usually during retirement

10. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
Slide # 10
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
Personal Financial Management
Pyramid
Risk and Tax Management:
goal setting, insurance, protection against
economic loss, income tax reduction
Building Long
Term Wealth:
goal setting, retirement
planning, investments
Cash Management:
goal setting, emergency, cash reserve, record keeping,
spending plans, net worth, and income-expense statements
Estate
Planning
Credit and Debt Management:
goal setting, credit use, avoiding credit abuse, debt reduction
Building Financial Security:
goal setting, savings plan,
home ownership, children’s education
Wealth Distribution
‘giving it to your chosen
ones’
Wealth Accumulation
‘giving it to yourself’
Basic Wealth
Protection
‘quit giving it to
others’

11. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
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Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
Life Cycle Events Activity
• People in certain age groups tend to have similar
life cycle needs
• What activities and events require financial
planning during each stage?
– High School Ages 13-17
– Young Adult Ages 18-24
– Adult With or Without Children Ages 25-34
– Working Parent or Adult Ages 35-44
– Midlife Ages 45-54
– Pre-Retirement Ages 55-64
– Retired Ages 65 and older
Identify
someone
you know
in each
category

12. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
Slide # 12
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
Traditional Age Group Financial
Planning Needs
• High School Ages 13 – 17
– Developing a plan for eventual
independence
– Preparing for career
– Evaluating future financial needs and
resources
– Exploring financial systems – banks,
etc.
– Developing a personal system of record
keeping

13. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
Slide # 13
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
Traditional Age Group Financial
Planning Needs
• Young Adult Ages 18 – 24
– Establishing a household
– Training for a career
– Earning financial independence
– Determining insurance needs
– Establishing credit
– Establishing savings
– Creating a spending plan
– Developing a personal financial identity
– Developing a personal financial system

14. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
Slide # 14
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
Traditional Age Group Financial
Planning Needs
• Adult With or Without Children Ages 25 –
34
– Child-bearing
– Child-raising
– Starting an education fund for children
– Expanding career goals
– Managing increased need for credit
– Discussing and managing additional
insurance needs
– Creating a will
– Maximizing financial management by all
members of household

15. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
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Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
Traditional Age Group Financial
Planning Needs
• Working Adult or Parent Ages 35 – 44
– Upgrading career training
– Building on children’s education fund
– Developing protection needs for head-of-
household
– Need for greater income due to expanding
needs
– Establishing retirement goals

16. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
Slide # 16
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
Traditional Age Group Financial
Planning Needs
• Midlife Ages 45 – 54
– Assisting with higher education for
children
– Investing
– Updating retirement plans
– Developing estate plans

17. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
Slide # 17
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
Traditional Age Group Financial
Planning Needs
• Pre-Retirement Ages 55 – 64
– Consolidating assets
– Planning future security
– Re-evaluating property transfer
– Investigating retirement part-time income or
volunteer work
– Evaluating expenses for retirement and current
housing
– Meeting responsibilities of ageing parents

18. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
Slide # 18
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
Traditional Age Group Financial
Planning Needs
• Retired Ages 65 and older
– Re-evaluating and adjusting living
conditions and spending as related to
health and income
– Adjusting insurance programs for
increasing risks
– Acquiring assistance in management
of personal and financial affairs
– Finalizing estate plan
– Finalizing will or letter of last
instructions

19. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
Slide # 19
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
Financial planning is not a one-time event. It is a dynamic process
that changes throughout your lifetime.
• Whether you are a young couple, business owner
or professional, approaching retirement or
already retired – we are there every step of the
way.
•
Accumulation Phase | Grow Your Wealth
•
Retirement Phase | Enjoy Your Retirement
•
Estate Planning Phase | Share Your Legacy
•

20. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
Slide # 20
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
True or False?
Everyone has the same
financial plan.

21. © Family Economics & Financial Education – May 2010 – Introduction to Finance Unit – Life Cycle of Financial Planning –
Slide # 21
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of
Arizona
1.11.2.G1
Thank You
For More Information
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