What are your priorities when it comes to money? After meeting all your monthly expenses, how do you manage the rest? Do you invest it or do you just keep it in your savings account?
Your financial plans should change with your age, to best serve the situation you are in. For instance, there will be a stage when you will have to start saving for retirement, or a stage when you will have to start saving for your child’s education.
Here’s a quick guide on how to manage your finances as you grow older. Keep in mind that different people may have different timings for doing something – for example, some people get married in their 20s while others may do so in their 30s or 40s – so this guide is as much about situations as age.
20s: When You Are Starting Your Professional Career
1. Build Your Savings
Of course, this assumes that you have already paid off your education loans. If you haven’t, make sure you pay your education loan on priority. Once you are debt free, start saving. Don’t wait till your 40s or 50s to start saving. The sooner you start, the better. This also means you should keep an eye on your expenses.
2. Manage Your Debt
Although you should manage your debts very carefully at all stages, 20s is definitely not the age to accumulate a lot of debt burden. Any default could spoil your chances of taking a loan for the rest of your life. If you use credit cards, make sure to pay it back on time. This way you will also build a good credit history that will help you at later stages of life.
30s and 40s: When You are Married With Kids
1. Think of Your Own Home
Buying your own home should be a priority at this age. It’s at this age that you have a stable income and that you can afford a home loan. However, make sure the loan doesn’t put too much burden on your finances.
2. Save for Your Child’s Tertiary Education
You know how expensive higher education can be. If you want to provide the best for your child, start saving the day you become a parent. Starting sooner than later will give you enough time to save enough for your child’s tertiary education at a good institution.
3. Protect Yourself
Now that you have so many responsibilities, and probably some debt too, it’s important that you insure yourself against any unforeseen circumstances. Having an insurance policy will make sure that if the unexpected happens, your family can still pay off the debts and live a healthy life.
50s and 60s: It’s Retirement Time, Finally
1. Re-think Your Investment Strategy
You are a few years away from your retirement. Your kids are settled and ready to start their own career. You have also probably paid off your home loan. In other words, it’s time to think about your retirement. You don’t need to take risks anymore, so re-consider your investments and minimise your portfolio risk.
2. Maximise Your Retirement Contribution
This is also the time when you should maximise your contributions to your retirement account. If you have no plans to earn after retirement, make sure you contribute enough money to meet your day-to-day expenses and live comfortably.
Remember: Like everywhere in else, when it comes to managing money, your attitude matters. The sooner you learn to adapt to the change, the easier it will be for you to get through any stage of life.
This article was written by BankBazaar.sg.
BankBazaar.sg is a leading online marketplace in Singapore that helps consumers compare and apply for a credit card, personal loan, home loan, car loan and insurance.
Follow this guide to help you navigate managing your finances as you grow up and get more financially smart.
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