Planning for the 3 financial stages of life

By Brian Loy

Brian Loy

Life and money are entwined, and it’s important that they are addressed together.

Financial planning should be specific to personal financial goals and priorities. Yet there are common areas for most people — three major financial life stages that are defined more by financial, career and family situations. These life transitions are outlined below, along with relevant planning and investment strategies to discuss with your family and trusted advisers.

Starting out

Typically, from the ages of 25 to 35, life’s journeys have just begun and this is where most encounter their first major life events. A challenge can be learning to develop priorities among competing goals. These include paying off school debt, exploring career paths and saving funds for a wedding, buying a home or car and planning to have a child.

Planning and investment strategies include:

► Developing good financial habits: Budgeting, starting a savings account and deciding how you/your partner will make the financial decisions.

► Debt reduction: Free yourself from school and credit card debt possibly using the “debt snowball strategy.” You payoff the smallest debt first and make minimum payments on the rest. Then you move on to the next smallest, and so on, until you’re debt-free.

► Cash reserves: Build a rainy-day fund for emergencies equivalent to three to six months’ of living expenses. 

► Enroll in company benefit programs: These include insurance, retirement and education programs. An important investment strategy is diversification. This can be conservative or more aggressive, possibly using a target date or life cycle funds.

► Network: Now is the time to find others who can help you with your decisions and planning. They include professional organizations, mentors and financial advisers.

Read the rest of the article at rgj.com.