From joining the workforce and starting out your career to getting married, buying a home, and reaching retirement… your financial priorities change during the different major phases of your life. Knowing what to prioritize and when will help you protect yourself, your wealth, and the well-being of your family. Here are the different financial priorities according to the different life stages…
Starting out
You’ve just concluded your academic education (high school, college, or university) and now you’re joining the workforce and getting your career off to an official start. At this stage, most people are focused on those short-term goals: moving out and earning enough to pay the bills. There is little attention paid to the overall financial picture and we tend to live from pay check to pay check.
Your financial priorities should be:
- Learning to live on a budget.
- Avoiding and paying off student debt.
- Beginning your retirement savings.
- Establishing an emergency savings fund.
- Getting insured.
- Investing (further) in your education and training.
Getting married
You’ve met “the one” and now two separate lives - and everything that comes with that - are joining to become one. You are now responsible for the welfare of another human being (as they are for yours), which means that your financial priorities will shift enormously.
Your financial priorities should be:
- Creating (or updating) your will so that your spouse will be looked after in the worst-case scenario.
- Updating your insurance policies so that you are both on the same one – this can save you money on premiums.
- Thinking about getting life and disability insurance.
- Buying a home and paying off your mortgage.
- Continuing to pay into that retirement and savings fund.
Having kids
You’ve created a home and now you want to fill it with little bundles of joy. Once again, your financial priorities will shift enormously and a life that has been all about your spouse until now will become all about your children.
Your financial priorities should be:
- Reviewing your estate plan (yet again) to accommodate your expanded family.
- Paying for their schooling.
- Teaching your kids about money, budgeting, and how to manage their own wealth.
- Creating a tertiary education fund.
- Accommodating the expenses that come hand-in-hand with having kids.
- Continuing to pay into your retirement and savings fund.
- Continuing to pay off your home’s mortgage.
Approaching retirement
You’ve spent your life until now building wealth and accumulating assets but now that you’re approaching retirement, it’s the time to actually plan what you’re going to do with your wealth.
Your financial priorities should be:
- Maxing out your retirement contributions.
- Consult an accountant to maximize your tax deductions as most people earn the most in this life stage.
- Planning the effective care of your parents if they require assisted living.
- Planning how you’re going to turn your retirement assets into an income.
Retirement
It’s finally time you kicked back and enjoyed the “Golden Years”. But just because you’re no longer working a 9 to 5 doesn’t mean you can rest on your financial laurels.
Your financial priorities should be:
- Creating a new budget based on your retirement income.
- Downsizing to a smaller, more manageable accommodation that will cost less.
- Reviewing your investments and your risk tolerance now that you’re no longer earning a steady salary.
- Researching how to fund potential long-term care costs because you and/or your spouse could eventually require it.
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