Your 20s
Your 20s are the perfect time to start building a savings plan. If you haven’t started a family or bought a home, it’s important to get your disposable income working for you, rather than just wasting it on entertainment or branded clothes and gadgets.
Your priority at this stage should be to start an emergency fund. This will protect you financially from future emergencies, such as hospital bills or excess on a car accident. Over time, you would build this up to cover at least three months of your monthly expenses, which would also protect you should you lose your job.
Also, start with retirement contributions as you’ll benefit from the compounding growth over time. The sooner you start putting money away for retirement, the less you’ll actually need to save over time. Bonuses and 13th cheques are excellent ways to boost your savings – aim to put 15% of those windfalls either into a retirement annuity or your company fund.
Have a savings plan in place for a car and a house. These are expensive assets that you’ll want to acquire. Only buy them when you have enough savings so you’re not taking on excessive debt.
Your 30s
By the time you are in your 30s, you should have acquired working skills and hopefully benefited from promotions – which means you’ll have more money.
Rather than using the extra income to buy a bigger house and upgrade your car, use it to boost your medium-term savings, especially if you’re planning on starting a family. Do not cash in your retirement fund when changing jobs. If you have, make sure you increase your contributions in order to catch up.
Your 40s
During this decade, you’ll probably see a further increase in your income due to work experience, but you also feel the full weight of family responsibility. You’ll have house payments, school fees and possibly ageing parents to take care of.
If you’re not already maximising your retirement savings, start now because it’s not that far away. If you have a family dependent on your income, you’ll need to review your life cover. Your short- and medium-term savings are going to be focused on school fees. Also start focusing on paying down your debts.
Your 50s
The 50s are usually a worrisome time financially. Most people only start to look at their retirement funding now and realise that it is way too little. Career wise, the risks increase as you get closer to retirement age and you may be the first on the list when companies are downsizing.
As with previous decades, the emergency fund is very important. Any medium-term savings now focus on planning a new career where you can work for yourself well into retirement.
Your 60s
This is the decade of reckoning. If your retirement plans are not sufficient, you’ll need to start making alternative plans. The good news is that you could consider cutting back on life cover if your mortgage is paid off and your dependants have moved on. The bad news is that you will need to boost your medical cover. If you haven’t already maximised your retirement funding, this is your absolute last chance. |
