Financial Planning for the 4 Main Phases of Your Life

Many people put off financial planning because they either don’t know where to begin, or they think they don’t have enough money to make a meaningful impact on their circumstances. The truth is, there is never an ideal time to begin and there is no specific level of income you need to have to make planning for the future worthwhile. You should begin planning for the future regardless of which life stage you are in and regardless of how much money you have. To begin the planning process, you first need to identify your present and future financial goals. What stage of life are you at right now? Let’s look at the major phases.

1. Early Career

The main focus in the beginning of one’s career is managing your cash flow and planning out your long-term financial goals. Financial planning in this phase should consist of mainly the following:

• -Learning to spend less than you earn
• -Forming a saving habit
• -Paying off high-interest debt and student loans
• -Learning about prudent investing
• -Beginning to contribute to a pension fund
• -Creating a financial plan with clear short term and long term goals

2. Mid-Career

This phase can be considered the “accumulation phase”. By the time you are mid-career, your income is higher and you can focus on setting aside money for long-term goals such as home ownership or saving for your children’s higher education. Financial planning in this phase should consist of mainly the following:

• -Maximizing contributions towards your pension
• -Acquiring adequate insurance for yourself and your family
• -Saving for your children’s higher education
• -Learning to pay for short-term goals (such as vacations) without debt
• -Investing with your goals in mind

3. Pre-Retirement

Ideally, by the time you are approaching retirement (i.e. retirement is 5-10 years away), you will already have accomplished most of your major financial goals. At this point you should re-evaluate your financial plan to ensure you are still on track, and make adjustments accordingly. Some things to look out for in your plan include:

• -If you took out a mortgage to buy your home, you should be well on your way to getting done with it
• -Any other debts should be minimal and likely to be fully paid off prior to retirement
• -There is a financial plan in place to continue educating your children
• -Look over your investment portfolio to ensure the strategy is still relevant to your current situation
• -You have a plan for managing your expenses in the long term

At this stage, you can make any adjustments to any discrepancies you notice between your plan and the actual situation.

4. Retirement

When you do finally retire, you will enter your “golden years”. During your golden years you can finally begin enjoying the fruits of all your hard work and planning. In this stage your debts are probably paid off and your finances should be in order. During this stage, you may want to plan how you will pass your assets on to your heirs. Financial planning in this phase may consist of mainly the following:

• -Estate management
•  -Retirement income planning
• -Cash flow management

So, what life phase are you currently in? Are you financially on track? It is never too late to adjust your trajectory and begin planning towards a brighter financial future. Whether you’re young and just getting started in your career or you’ve been doing it for decades, we at The Square Bracket can help you create a personalized plan to help you work toward all your goals. If you’d like us to assist you with your financial plan, click here.