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Best laid plans

Proper planning across different life stages can make all the difference when it comes to meeting your financial goals. Here’s how you can avoid delays and breakdowns.

Print Edition: November, 2009

Proper planning across different life stages can make all the difference when it comes to meeting your financial goals. Here’s how you can avoid delays and breakdowns.

Life stages, life events and your finances
There are specific financial events that take place at different stages of your life
LIFE STAGELIFE EVENTSFINANCIAL EVENTS
OneEnter work force, marriage, childrenDevelop good financial habits, buy car, buy home
TwoFamily grows, career advances, inheritanceBuy larger home, fund child’s education, support financial dependents
ThreeRetirement, grandchildren, death of spousePreserve wealth, estate planning, working on ways for wealth to start paying out

Footloose Single
It’s possibly the best time of your life - money coming in and no responsibilities. It’s also the best time to start saving and planning for the rest of your life. Establish sound financial habits early on and you can rest easy as you head closer to retirement. Start saving and investing wisely to take advantage of the power of compounding. Set yourself savings goals to give you motivation to put away a specific sum every month. Control your borrowing, and curb profligate use of credit cards. And finally, make sure you take some medical insurance--this is when premiums will be low and cover high.

Single and established
Your mid to late 20s are your prime earning years. This is also a potential minefield, because you have plenty of money and no real responsibilities. Your best bet is an automatic savings programme, where a specified amount is swept in to an investment plan before you lay hands on it. Continue your earlier savings and investment habits, and think of taking life insurance if you plan to start a family. If you must borrow, do so for buying things with long-term value.

Established with a family
Marriage, family, added responsibilities. Even as your income rises, so do expenses. Chances are that you’ll start your own family. Start saving for your child’s education, and also plan for a home of your own. Consider an asset allocation strategy that matches your risk tolerance. This is also when you will need to insure your life so your financial dependents do not suffer; also beef up your medical cover.

Ready to retire
As you head closer to retirement, ensure that you have adequate medical cover. Also, start allocating assets in such a way that they pay you regular sums once you stop earning. If your nest egg is insufficient, consider postponing retirement or look for a second career. Manage your investments carefully and draw up a comprehensive estate plan. Seek expert advice if needed.

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