Life in Money: How Much to Save for Each Stage of Life
Unfortunately for all of us, money doesn’t grow on trees. Unless you plan carefully throughout each stage of your life, you may find yourself broke at the end of it. Financial planning is the key to ensuring that you have one less thing to worry about when you retire.
Your approach to planning should depend on what life stage you are at. Here are the five financial stages of life, potential goals for each, and some tips on how you can meet those goals each step of the way.
Post-Secondary and Early Adult Years
Many believe that your 20s are a time to be young and carefree. It seems like there will be plenty of time later to worry about money, but experts say that it’s never too soon to start taking charge of your financial future. At this stage in your life, you might be attending college or university, starting your career, working different types of jobs, or searching for a life partner. Your income is likely to start out on the lower end.
Like many young people, your biggest financial goals are probably related to education costs, whether you’re saving up for tuition or attempting to pay back student loans. Aside from education, many people at this stage are also new to living independently and are spending money on home furnishings, vehicles, and everything else you need to be a full-fledged grown-up. You should also be focusing on building an emergency fund, because the bank of mom and dad isn’t open forever and you never know what life might throw your way.
With so many expenses and so much fun to be had at this point in your life, it’s easy to let savings fall by the wayside. But there’s no better time to set yourself up with a budget to track your expenses. Your goal should be to start saving at least 25% of your income. Not only will you be building a foundation for your savings account, but you will also be making budgeting a habit, which will come in handy throughout all the stages of your life.