TEMPLE, Texas — If you weren't born independently wealthy, you will go through a few different stages in life when it comes to financial planning. So, what are those stages? We are glad that you asked! The financial planning life stages are the focus of this Money Talks.
When you are just starting out in your career, keep it simple, set a budget and save a little, as that will pay big dividends for your future!
"For the first few years out of college, your focus should be on developing good financial habits," Certified Financial Planner Neil Vannoy told 6 News. "You should strive to live within your means, avoid consumer debt, establish a cash reserve for emergencies and begin to build your investment assets."
The second stage you will be in for quite a while, in fact, most of your working career!
“The next stage involves building assets for all of your financial goals like college education for your children, vacations and retirement," Vannoy said. "Obviously, this process starts slowly but ramps up as you reach the peak of your earning potential and your children leave home. In addition to 'how much' to save, focus on 'where' to save and take advantage of accounts with favorable tax treatment both now as well as in the future."
Shortly before retirement is when the fun begins if you have been saving! Time to really fine-tune that plan!
"During the 5 to 10 years before retirement, you should tighten up your retirement plan, make sure you're saving enough, and start to get an idea of how you'll make the switch from "accumulating" a nest egg to living off of that money in retirement," Vannoy said.
Then there's retirement, where you want to live as long as you can to keep collecting from the government. But there is something to keep in mind!
"The biggest mistake people make when they retire is forgetting that they might have another 30+ years to live, so during this stage you want to have a strategy in place that will give you the secure income as well as the growth potential you'll need to keep up with inflation over time," Vannoy told 6 News.
In a recent survey according to Money Watch, only about 10% of Americans between the ages of 62 and 70 are both retired and financially stable, so it's a tricky thing to accomplish for sure!
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