by Trusted Advisor
No matter what age you are, your finances play a large part of your daily life. And unfortunately, it never gets easier. Each of us makes different financial decisions and priorities at different times and the plans and decisions you make will be unique to your individual circumstances and needs. That said, it does help to reach certain financial milestones.
In this blog, I’ve listed some of the financial goals you should aim to achieve at each stage of your life in order to secure a comfortable financial future.
In your 20s
Learn to budget and become financially independent. You may have been relying on your parents, but as soon as you start earning your own income, you need to go out on your own and learn to live within your means. You also need to learn how to do your taxes.
Pay off your student loan if you have one. Student loans can be very large, and may be a significant portion of your financial considerations at this age. As soon as you have a steady income, you need to put a plan in place to start paying off yours and stick to it.
Start saving some money each month. It’s never too soon to get into the habit of saving some of your paycheck each month: 10% is a good rule of thumb. At the very least, you need to build up an emergency fund to cover unexpected bills that crop up. If you plan on getting married, you may also need to consider saving for your wedding.
In your 30s
Pay off your debts (other than your mortgage). Use this decade to consolidate your finances and pay off your car, your student loan, your credit cards and any other debts you may have. This will position you to start planning your finances more strategically – for your children’s education (if you have them) and for your retirement.
Have at least 6 months of income saved. By this stage of your life, you need to have a large enough emergency fund to cover the bills if you or your spouse loses your job, or if a large medical emergency happens. This is especially true if you have children.
Start planning and building your retirement savings, either through your company’s fund or your own individual plan. If you haven’t already begun to do so, now is the time to really start building for your retirement. Compound interest is your friend when it comes to saving, and the earlier you start the better. Diversify your investments and spread your risk.
In your 40s
Start investing strategically. At this stage you should have a balanced retirement portfolio that will comfortably provide for you into your nineties. If you do not already have a financial planner, now is the time to consult one to make sure that your investments are appropriate.
Ensure that your debts are paid off. If you have any debts outstanding, other than your mortgage or regular monthly credit card debt, it is critical that you pay these off.
Consider life insurance. At this stage, unpleasant as it may be, you need to start thinking about how to provide for your family if something unexpected happens to you. This is a must if you have children. Also make sure that your house and other assets are properly insured.
Plan your estate. It may seem premature, but it is not too early to get a will drawn up. It is imperative when you have dependents or significant assets. You may want to put some of your assets in trusts or other estate planning tools.
In your 50s
Pay off your mortgage if you have not already done so. This will enable you to enjoy your home during your retirement. Or, if you plan to move, you will have access to the full proceeds of the sale.
Review your retirement portfolio and max out your retirement contributions. At this point, do some pre-retirement math and make sure that you are contributing as much as possible to your retirement fund. Speak to your financial planner and ensure that your current savings plan will provide you with enough money to retire. Stick to your savings plan and retirement budget so you can retire when you want to. Also make sure that your investments are appropriately balanced.
In your 60s
Ensure that you have reached your retirement goals. Make sure you have enough money in retirement savings to support yourself and your family. Stick to your savings plan, and then your retirement budget.
Plan your estate if you have not already done so. If you do not already have a will, get one drawn up and plan your estate as soon as possible.
