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Setting financial priorities for your life stage

Setting financial priorities for your life stage

As we go through different stages of our lives our financial priorities change.  You will benefit in the short and long term if you are aware of your financial priorities and set yourself goals on a regular basis. 

This should allow you to live the life you want to live with as little stress as possible when it comes to your finances.

 Are you…?

..Young, Free and Single

You’re never too young to start saving for the future but make sure you have some fun money too!

Financial Priorities:

·      Save, save, save in your early adult years, it is a good idea to start putting what money you can aside for a house and retirement.  The earlier you start saving into a pension the better.  You probably won’t miss say £40 from your salary but if you think about employer contributions you could gain on top, tax savings and what the money will make over the time it’s invested, it will be well worth it. 

·      Budget wisely, automate as many of your direct debits and standing orders for things like savings as you can, so they come out of your bank account before you have a chance to see what you have left.  Don’t forget to set aside some fun money! After all you’re young, free and single so enjoy it!

·      Stay on top of debt! Did you notice that when you turned 18 your bank suddenly wanted to lend you money in the form of overdrafts, credit cards and loans?! Having some credit can help you build a better credit rating which helps when you apply for a mortgage. The rules are only borrow what you can afford to pay back and be sure to make your repayments on time.


..a Young Family

When you have children, it brings a whole new dimension to your finances and your sense of responsibility as a provider kicks in.  It’s time to start getting a bit more serious about your financial security.

Financial priorities:

·      All of the above still applies!  Make sure you have good foundations in place – all of the above from young, free and single still applies here.  It’s never too late to start managing your money wisely.  You might also consider starting savings for your children to set them up on the right path in the future.

·      Protect your family,  one of the main things that you need to do as a parent is protect your family financially if the worst were to happen to you.  Make sure you get the right amount of life cover in place – shockingly only 1 in 4 people have any life insurance but 3 in 4 have contents insurance*!

·      Don’t fall out over money!  Make sure you and your partner are on the same page when it comes to finances.  Money is one of the most common things that couples argue about which is not healthy for your relationship or your children.  If you communicate with each other and have the same financial goals you can avoid unpleasant disagreements.

·      Build up an ‘emergency’ fund. Whether you have a family or not, it’s always worth having a bit of back up cash in the bank.  Make sure you dedicate money aside to build up an emergency fund; 3 months’ income is often suggested. It needs to be accessible if a true emergency arises – and we aren’t talking about a holiday to Disneyland!

*Association of British Insurers (ABI)


..a Mature Family

Perhaps your kids have grown up and are about to fly the nest, whether that is getting their first job, going to university or travelling.  It’s time to take stock of your finances so you know where you stand for the future.

Financial priorities:

·      Invest wisely, you may find that you’re having to pay out some of your savings to fund your children through University.  If you can, try and keep some money back for your future investment pot and continue to contribute too.  You may want to see a financial adviser at this point in your life to make sure your put your eggs in the right baskets.

·      Reduce debt, if you have any large debts now is a good time to work on reducing them.  Hopefully you have a bit more cash now the kids are becoming more independent, so dedicate this to paying off any debts you have before you reach retirement.

·      Start thinking about your retirement! Now is a good time to get serious about your retirement plans.  Find out where you currently stand with what you have saved so far – if you see a financial adviser, they will help you do this.  Consider how much money you want/need in retirement and identify whether there is a gap in funds.  If there is a gap you still have time to address this before you retire.


..Pre Retirement

You have now reached the stage in your life when you can hopefully comfortably retire and reap the benefits of all the smart saving and investing you have been doing!

Financial priorities:

·      Find out when you can afford to retire When you reach retirement and want to take your pension there is now more choice than ever before.  Each option has its own advantages and disadvantages and it is recommended that you seek financial advice to make sure you make the pension choice that is right for you.

·      Consider a downsize? A popular way of releasing money in retirement is to downsize your home to release some the equity you have. Your living requirements are likely to have changed and you might need less bedrooms, a more manageable garden or a home that is all on one floor

·      Estate planning You should already have a will in place.  At this time in your life it would be a good idea to review your will to make sure it is up to date.  You may also want to review your investments and check your insurance needs to make sure these are still working well for you.

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