Your financial goals will evolve at each stage of your life. Here are some financial planning tips to help you achieve them by managing your money better.
These days, more women are working toward their own financial independence than they ever did in the past.
It’s not unusual to see young women focusing on their ambitions with a drive and passion that was previously reserved only for their children or spouse, as well as working women who manage to find a balance between family and career.
While it’s great to see that so many of us are taking charge of our earnings and savings, we’re still lagging behind in one key area – financial planning.
This has traditionally been considered a man’s domain, but we can never be truly independent and self-reliant until we understand and implement the right moves on our own.
Effective Money Management & Financial Planning
Managing finances effectively goes far beyond planning a monthly budget and sticking to it. It’s also a little more complex than saving a little extra money every month.
Don’t get us wrong, savings are great, but they aren’t enough on their own. You also need the right investment strategies to achieve your financial goals. As working women, it’s critical to gain more insight into financial responsibility and money management.
With basic financial literacy and some smart investment choices, nothing can stand between you and your goals at any stage in life. The best part is, you won’t have to depend on anyone else to make your dreams come true..
6 Different Life Stages & Financial Planning Tips For Each Stage
Your needs and wants will keep changing with time. The decisions you make while you’re in college will be quite different from those you make when you’re planning a family.
What you want while starting a career will be a far cry from what you want when you’re near retirement. Just like your personal goals, your financial goals will evolve at each stage of life.
Here are some tips that will help you achieve them by managing money better:
1. The late teens & the early 20s
At this stage, you’re probably pursuing higher education and the tuition costs that come with it. Depending on where you went to college, you might have an education or student loan you need to start paying back.
You may be considering moving out of your parents’ home and renting your own place. Perhaps you’re even looking to buy a vehicle, save money for travel, or invest in professional courses to help your career.
This is the stage where you learn how to live within a budget as well as understand what you can afford to spend on and what you cannot.
Keep track of your expenses and avoid the temptation of using a credit card or personal loan for unnecessary spending. You don’t really have major financial responsibilities right now, but it’s the perfect time to start planning for the future in a smart manner.
2. The mid-20s to early 30s
This is the early career stage, where you’re beginning to find your feet professionally as well as personally. Your financial goals at this stage might include making a down payment on your own home, paying back loans or credit card debt, saving for a big wedding or starting a family.
You might also want to put money aside for holidays, travel and personal interests. While career growth, marriage and family become important for most working women around this stage, it’s essential to look even further.
This is the time when you want to start making investments for retirement instead of just saving money. Not only will this help you be more comfortable and independent later, but it can also help you save on taxes. Make sure you’ve invested in insurance as well!
3. The mid-30s to early 40s
For most women, this period is generally defined by family obligations. Even working women usually juggle career and family at this stage, so they can help raise their children and give them a good education.
Even if you haven’t gone the family way, you might be supporting your own parents around this time. Don’t let your financial independence plan slide, though.
This stage might place a heavier burden on you, especially if you have home loans, car loans and other debt to pay off. Make sure you and your spouse are on the same page when it comes to joint and personal goals.
If you haven’t started making regular contributions to your pension plan, repaying debt and building some assets in your own name, consider getting investment planning advice from an expert.
4. The mid-40s to mid-50s
These are the pre-retirement years for most people when they take a serious look at how much they have saved, invested and accumulated over the course of their career.
This is the time to review your insurance coverage as well, since health issues are likely to start showing up, and unexpected medical expenses can wipe out your savings if you haven’t protected against them.
Depending on your lifestyle and income, you may have some decent savings in your nest egg already. If you aren’t on track with your retirement goals, take a good hard look at your expenses and cut down where you can.
Unless you want to be working all your life, it’s essential to make some changes to your incoming and outgoing funds so you aren’t dependent on anyone else as you get older.
5. The late 50s to mid-60s
Early retirement is usually the time when you can spend more time doing what you love instead of worrying about how to make ends meet. Of course, this will only happen if you’ve saved and invested wisely.
This is the time when you should have a passive income from your nest egg, so you can travel, take up a hobby or even look into starting up a new business in retirement.
By now, you have probably managed to build up a good credit score and you may have access to a personal line of credit for emergencies or investment opportunities.
Your children, if you have any, have grown up and might even be starting families of their own. This is a good time to review your will, health and life insurance coverage, emergency funds, and what you plan to leave behind for future generations.
6. The late 60s and beyond
The later stages of retirement are generally not as carefree as early retirement years since age-related issues make it difficult to do everything you’d like.
This is the time when most women become dependent on their children or other family members for support, especially if they haven’t planned their finances to outlive them instead of the other way around.
Even if you don’t want to be a burden on your loved ones, you need to consider your safety and security at this stage. You may lose your spouse at any time, and single older women become targets for all sorts of foul crimes in our society.
It might be a good idea to consider living with your children or other trusted relatives, especially if you can help them share expenses instead of living “off” them.
No matter what stage of life you’re at, your financial independence and security should be considered the most important goal.
Learn about different kinds of investment options and how they work, and start managing your finances more effectively from the day you start earning.
There’s plenty of help and advice available, but no one else can make your decisions for you. At least, no one should!
About the author:
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at firstname.lastname@example.org