How Our Financial Priorities Change With Age

As we travel through life, our financial priorities change and our financial goals and needs evolve. In this article, we explore how money priorities can change with age and what steps you can take to make the most of your finances at each stage.

In Your 20s

Your twenties are a time of exploration and experimentation. You may have just finished University or be starting your first job, and your financial priorities might be about having fun rather than being focused on building a firm financial foundation for the future. The fact that you’ll probably have less income than you will in later life means that it can be tricky to do all that you want and still plan for the future. However, with good money skills you should be able to do both. From a financial perspective, your priorities in your 20s should include:

• Building an emergency fund: You should aim to save enough to cover three to six months' worth of living expenses, to provide some financial security.
• Start your savings habit: Saving a small amount each month is a great way to start building a sustainable savings habit which will stand you in good stead for the future.
• Use credit sensibly: Only borrow money that you can afford to pay back by the due date. Borrowing money to achieve a goal (e.g., to buy a house) can be an investment in your future, borrowing money for something you can’t afford that you don’t really need (e.g,. a luxury holiday) can be the start of spiralling debt, so be wary.
• Start saving for retirement: Although retirement may seem like a distant goal, the earlier you start saving, the more time your money has to grow.

In Your 30s

In your thirties, you may have established yourself in your career, started living with a partner and started a family. Your financial goals and priorities are likely to shift as you face new responsibilities and challenges and begin to settle down. Financial priorities in your 30s should include:

• Increase saving for a home: If you plan to buy a home, now is the time to increase saving for a down payment.
• Protecting your assets: As you start accumulating wealth, you need to protect it. Consider getting life insurance, disability and illness insurance, and other types of insurance to help safeguard your finances, your income and your future.
• Increasing retirement savings: As your income grows, you should increase the amount you are saving for retirement and start boosting your retirement fund.

In Your 40s

In your forties, you may be in the prime of your career and earning more money than you have in the past. However, you may also have more financial obligations, such as caring for ageing parents or paying for your children's education and future. In your forties, financial priorities should include:

• Paying off debt: If you have credit card debt or a mortgage, focus on paying it off as quickly as possible. This will help you save money in the long run and free up funds for other financial goals.
• Increasing retirement savings: With retirement getting closer, it's important to make sure you're saving enough. Consider increasing contributions to your retirement fund or opening a new retirement savings account if you haven't already. It’s never too late!
• Planning for long-term care: As you get older, the likelihood of needing long-term care increases. How would you fund long-care if you needed it? Is there any insurance you could buy to protect you?
• Building an estate plan: Have you written your Will? Have you considered how you want your estate to be distributed in future. Getting your Will done will ensure your money and property will go to the people that you want it to go to.

In Your 50s and Beyond

In your fifties and beyond, you may be looking forward to retirement and have a clearer idea of your financial goals and priorities. You may also be facing the prospect of supporting ageing parents, assisting grown children and dealing with changes to your health. Your financial priorities in your 50s and beyond should include:

• Retirement Planning: At this stage of life, retirement planning should be a top priority. It's important to assess your retirement needs and make sure you have saved enough to sustain your lifestyle after retirement. Consider consulting with a financial advisor to develop a plan to maximise your retirement savings.
• Estate Planning: If you haven’t done so already, start thinking about estate planning. If you already have a Will, does it need updating? If you haven’t done one yet, now is the time.
• Healthcare Planning: Healthcare costs can be significant in retirement. Consider purchasing long-term care insurance to protect your assets and plan for potential healthcare expenses.

It is important to remember that everyone's financial situation and life will be unique. This article is intended to help you consider what your financial priorities are but consider consulting with a financial advisor to develop a financial plan tailored to you, your life and your needs.