Financial planning is an essential skill for any autonomous adult to master. Nonetheless, what financial planning looks like can vary significantly during different stages of life. In the first years of adulthood, priorities may be set on finding the right career path, learning how to budget, and paying off student loans. However, later in life, more emphasis is placed on family, retirement planning, financial investments, and determining beneficiaries for estate planning. Regardless of where you are on life’s path, read over the following synopsis for financial planning for each phase of life. You might receive confirmation that you are exactly on the right track. If not, you might find some useful reminders for what serious financial planning should look like long term.
Post-Secondary and Early Career
After completing high school, many individuals make the decision to enter the workforce, join the military, or pursue a college degree. While after high school some young adults continue to live with their parents, others may receive their first introduction to renting property, living with roommates, and sticking to a budget. Major expenses may include purchasing a car, paying off student loans, and buying furnishing for housing. During this phase of life, it is essential to begin building a savings account and understanding what it means to pay off debt. Young adulthood and the early-career years often grant individuals a lot of learning experience with personal finances, sometimes through trial and error. It is key to emerge from this life phase with regulated budgeting skills and initial efforts to free oneself from acquired debts and invest in long-term saving.
Building a Career and Family
Once a person has established a dedicated career path, financial goals can become more concrete. During this segment of life, between the late twenties and early forties, many people make more serious long-term savings plans and investments in addition to starting a family. Many people in this phase of life purchase a home for the first time or sell a starter home in order to make room for spouses and children. Couples need to start having serious conversations about cooperative budgeting and supporting children. Priorities can include merging accounts, growing already-existing savings, drafting a will, and taking a more serious approach to planning for retirement. Some people also look into side investments like starting a business or purchasing a rental property. For families with children, creating a savings account for educational purposes becomes another important financial concern.
Preparing for Retirement
Pre-retirement for many spans from the late forties to early sixties. During this phase of life, families can either be well established or even separated. Financial priorities include paying off mortgages and other incurred debts, investing further into retirement plans, and preparing children for their own college or career paths and even marriage. Sometimes, people in this phase of life start to seek additional opportunities for earnings and part-time work that can be sustained during retirement. Also, people may seek consultation with financial advisors in order to assure that their assets will provide them with a comfortable retirement.
Early Retirement Years
The early retirement years offer a fresh start for many new retirees, especially if they have made responsible financial decisions throughout their lives. Retirees often set personal goals to maintain an active lifestyle. They may venture into opening a new business, plan to travel the world, seek opportunities for volunteering in the community, or maintain a part-time job. Retirees have to carefully assess their finances and create an appropriate budget that will make their retirement savings and income last. In addition, children of retirees may also begin starting their own families, which could necessitate further financial support.
Later Retirement Years
During later retirement years, many people begin to slow down and prioritize a healthy life. They must assess their finances for both health care needs and estate planning. Many retirees during this phase of life begin to downsize, sell their cars and homes, and get rid of many tangible items. Sometimes, retirees choose to move into assisted-living communities that offer services and amenities on site, removing the need for transportation. During this phase of life, estate planning and beneficiaries become solidified, and extra income may be used to support children and grandchildren in reaching their financial goals.
Regardless of where you are in your financial planning, BMG Money wants to ensure financial success for all its customers. Use this post as an opportunity to reflect upon where you are with your personal finances. If in need of support, consider whether a short-term loan may be an option for your financial wellness and long term goals.