Stages of Life Money Management

The stage of life you are in will determine the financial management strategies you should employ. A financial management strategy for a 30-year-old single person will be different from a 30-year-old married person.

Likewise, the 30-year-old has vastly different financial goals and responsibilities compared to a 65-year-old.

There is never, nor can there ever be, a one-size-fits-all financial management strategy or plan. Stages of life, lifestyle differences, individual circumstances and objectives require a personalized strategy.

Early Career Years

Typically, this will begin after graduating from college or some other type of specialized training. During this time, it is common for your expenses to exceed income. As a result, you can easily become burdened with debt that take you years to pay off. Obviously, you don’t want debt to control your life. Some goals for this life stage may include:

  • Paying off student or specialized training loans
  • Buying a car
  • Buying all the household furnishings needed for your rented home or apartment
  • Starting a savings and investment plan
  • Developing a good credit history and score

Right from the start you need to track your expenses and have a budget. This is the only way you can really learn financial discipline.

You must establish an Emergency Fund equal to 3 – 6 months of your expenses. This will be your cash reserve to pay for any number of unforeseen financial setbacks that will come your way … and they will come.

This is also the stage in life when you will most likely be looking for a life partner. Both partners need to be fully aware of the financial situation of the other partner including income, personal expenses and debt. It is also important to know the financial philosophy of each other. (Is one and saver while the other one is a spender?) There needs to be some brutally honest discussions so both parties know exactly the philosophy and spending habits of the other partner.

If you are single and it appears you will remain single for a few years ahead, you are in a perfect position to aggressively save and invest. Doing this will put you decades ahead of your peers. I promise that you’ll never regret it.

Career Advancement and Family Years

This stage in life will be your most challenging in maintaining financial discipline. As you grow in your career, your income will grow. Your financial responsibilities will never be greater. This time in your life will provide you with memories you will never forget. Some financial objectives at this stage of your life may include:

  • Saving for a down payment for your first home
  • Buying a home
  • Growing your savings and investment accounts
  • Building an education fund for your children
  • Putting money aside to start a business

If you have a family, you must have:

  • A will
  • Life insurance

If you are single, you need to have a will and a plan if you become seriously disabled or of your premature death. Someone needs to be appointed to handle and disburse your estate. I recommend using an estate attorney.

Empty Nest Years

These are the years after your last child has moved out of the household and retirement. This is the stage that you (and your spouse) focus all your financial strategies and resources towards a financially secure retirement. Some areas to consider are:

  • Aggressively increase your deposits to your savings and investment accounts. It is far better to run out of life before you run out of money than to run out of money before you run out of life.
  • Pay off all debts before you actually retire
  • Develop a plan for long-term care (insurance, savings, etc.)
  • Make sure your will(s) are in order based on your wishes

Two years before your planned retirement date, you should develop a budget based on your anticipated monthly retirement income. The purpose is to have all the “kinks” worked out of your budget so you can confidently enter retirement knowing that you can comfortably live the lifestyle you worked all your life for.

Retirement Years

You made it! This is the stage when the money you saved and invested throughout your working life will take care of you. Some considerations at this life stage are:

  • Minimizing taxes
  • Finalize your will(s) and estate planning

With your financial advisor, annually review and make any needed changes to your savings and investments to make sure they will continue to provide the needed income for as long as you live.

“We work all our lives so we can retire – so we can do what we want with our time – and the way we define or spend our time defines who we are and what we value.”
– Bruce Linton


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Published by W. M. Brown

I am a retired U.S. expat living in Ecuador. I was a business owner for 32 years before retiring in 2012.

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