The consumption plan for lifetime

In economics, especially in macroeconomics, there is one important concept that individuals tend to smooth their consumptions over time. This concept suggests that individuals tend to consume above their incomes when their incomes temporarily fall below the average income levels and consume below their incomes when their incomes temporarily increase above their average income levels. However, this may be too idealistic in the real world and the consumption habit in the real world may have a different pattern. 

Firstly, individuals can save when their incomes are high, but they are unable to borrow when their incomes are low. Usually individuals have lower incomes at their early stages of their career but they cannot borrow enough for consume more when they expect their incomes are going to rise, because the financial institutions do not believe their incomes can pay back their loans. Therefore, due to the borrowing constraint, individuals cannot smooth their consumptions when their incomes are low, even though they believe their incomes will rise and afford loan paybacks. Secondly, individuals want to increase their consumption over time. Individuals feel better only when their consumption increases. This will lead people to increasing their consumptions along with their incomes increase to receive more satisfaction. Thirdly, individuals do not necessarily have right expectations about their future incomes. When the individuals do not have correct expectations about their futures, they are likely to have more volatile consumption over time. Moreover, some may involve in the financial market, and this adds more volatility to individuals' incomes as well as their consumption. 

Because of these reasons and many others, individuals may make their consumption decisions based on their current incomes and foreseeable very near future income changes. Under such circumstance, individuals' consumption is tightly related to the economic performance, and this will violate the concept of consumption smoothing.