Financial Planning for All Ages
A commitment to financial planning is the key to wealth building and financial freedom. People of all ages dream about freedom from financial pressures and constraints but unfortunately, not nearly enough people take the steps necessary to actually achieve it. With an increasing number of people struggling to keep up with debt repayments and/or, everyday costs of living, financial planning should be on everyone’s agenda, no matter what stage of life they are at.
A common misconception is that financial planning is only for people with money to invest or for people who earn a lot of money. Financial planning actually benefits everyone, of all income levels and of all wealth (or debt) levels. As long as an individual is committed to building wealth over time, financial planning can help you achieve your goals, in the most efficient way.
Another misconception is that financial planning is only for people when they start to think about retirement, this is absolutely not true. The sooner one starts to build wealth, the sooner one can retire and people who commit early to accumulating wealth, can achieve financial freedom at a much earlier stage in life.
While it is ideal to start this journey as early as possible, don’t panic if you haven’t yet taken steps in this area. Here are some basic tips to consider for each main stage of life:
Financial Planning for Young People (18-30’s)
Transitioning from teenage years to adulthood, joining the workforce, relationships, moving out of home and embarking on the journey towards financial independence …. this is a time of change and while many may be too busy living in the moment, this is actually the optimal time to start one’s wealth building journey. The earlier people begin planning their finances, the easier it actually becomes! To get ahead financially, it is recommended that people in this age group focus on the following:
- Take responsibility for your personal financial situation. If you complain that you do not earn enough money, or it is too expensive to buy a house, you need to accept your current financial situation and circumstances and instead of using them as an excuse not to get ahead, focus on what you can do and change to better your financial position. This may mean some short-term sacrifices but being proactive about achieving your goals will get you there faster than sitting around, complaining and blaming.
- Take the time to educate yourself about financial matters. A lot of people think that understanding finances is too difficult. With all the resources and advice readily available online, you can start by seeking to understand the basics.
- Start saving and/or investing ASAP, even if you can only save a small amount from each pay deposit. The ‘magic’ of compound interest means that these regular, small amounts will add up over time.
- Seek professional advice, a financial adviser can help you set your goals and budget, manage your cash flow and start accumulating wealth.
Financial Planning for Middle-Aged People
With everything from a mortgage or renting a larger place to managing your credit card debt and even dealing with the expense of having children – planning is key to getting through this stage of life successfully. From the age of 30 to 50, most people have these expenses and at the same time, are looking to secure their future income for retirement.
While ideally, you will have already implemented the tips listed above, if you have not yet done so, start now. This age group should have structure and discipline around managing their finances however, unfortunately, many people are still living from pay to pay and breaking this cycle, is critical.
People in this age group need to focus on:
- Managing their cash flow based on a structured and disciplined approach.
- Establishing a habit of putting away money and proactively making progress towards saving for your future.
- Maximising the gap between your income and expenses. There are lots of different ways to achieve this. For example, as you progress through your career, if you receive a pay rise, try and save all (or at least the majority) of the pay rise. If you do this, you will not notice it missing from day to day spending – if you never had it the first place and had a taste for what it feels like to spend, you will never have to miss it.
- Seeking professional advice, a financial adviser can provide tailored strategies based on your individual needs and situation.
Financial Planning for People Aged 50+
From the age of 50 upwards, many people begin to think about retirement as their kids are getting older, possibly moving away from home, and the mortgage is coming to an end.
While people should have started to plan for retirement earlier, it is never too late to start the financial planning process. People in their fifties still have plenty of years left of earning potential. They also have the benefit of being at their highest earning capacity and will generally have their highest amount of disposable income available, compared to their earlier years.
Just because retirement is on the horizon, do not think “it is too late”. You will need to push hard to achieve your goals but with advice from the right financial adviser, you can still achieve financial freedom.
Talking to a Financial Adviser
If you want to get ahead financially, talk to a financial adviser today. No matter what stage you are at in life, if you are serious and committed to building wealth, the sooner you start the conversation, the sooner you can enjoy the freedom that good financial health will bring.
Ready to talk to a financial adviser? Get in touch with Talem Wealth and thrive financially.