When financial disaster strikes us and we blame debt for it, do we ever once spare a thought towards the fact that it could have been easily averted had we been careful with our financial planning earlier? Yes, finance management or rather smart money management at every stage of life is the only way to avoid the hassles of debt and debt management later on.
Financial freedom and savings are two very important things to consider in life, when managing money with expertise.
What are smart money management techniques?
Every family and every individual needs to cultivate smart money management techniques in life. These include budgeting, purchasing real estate properties and paying off EMIs (Equated Monthly Installments), not to mention planning for children's higher education and retirement.
Smart money management techniques are indispensable for holding upright the current lifestyle and also to achieve and accomplish all future financial targets, regardless of how old or how young you are. Admittedly, the financial requirements of a young family is hugely different from a family of seniors, but to get the best financial results at each stage, one must be conscious enough to plan way ahead of time.
How to manage money matters at different ages?
20s & 30s
People belonging to this age group are likely to have started earning or planning on taking up their first job! At this juncture therefore, they must focus extensively on building the basis of wealth accumulation by enhancing the income strata as much as they can and chalking out a strict budget, making wise and lucrative investments and living a disciplined life. At least 50% of the salary needs to be saved in different investment options that carry high interest rates.
30s & 40s
Most individuals start a family at this age. This is the time when kids and expenses start to arrive. The focus therefore tends to lean towards accumulation of wealth, ownership of assets, real estate investments and planning for the future of children. Both spouses preferably should work during this period and strengthen the funds and bank accounts as much as they can. More heed, at this hour, needs to be paid towards investment options, insurance offerings, vehicle/home insurance etc. and debts are to be avoided as much as possible.
50s & 60s
People who have been careful with money manage to pay off their debts and mortgages by this time. Children too are grown up by now and they possibly are more focused on seeking their own earning paths. Yes, now is the best time to diversify the investment portfolio and consider more secure investments. It is important to shift focus from equity investments and start shoring up debt instruments to preserve capital for your fast approaching retirement! The importance of asset allocation and making a will etc. must not be overlooked.
60 & above
Most individuals approach retirement at this age and this is the time which will tell whether you have saved wisely for the prime years and invested in the right places or not. The pay-off for smart money management starts now. Make sure that you review your pension entitlements and get your pension benefits without fail.
Good financial planning at every stage of life can make travelling towards financial rewards a cakewalk. So be disciplined with money in your life and financial downturns will stay away from you, always!