Five financial goals, one for every decade, that we think could help you achieve your goals and make the most of the money you earn during your lifetime.
While there may be some fortunate individuals from whom financial planning unnecessary, for the rest of us, it’s beneficial to have a plan in place for every stage of our lives. It’s never too late or too early to get on top of money matters but it really does pay to start young. With that in mind, we’re going to suggest five financial goals, one for every decade, that we think could help you achieve your long-term aspirations and make the most of the money you earn during your lifetime.
In your twenties…
- Live within your means
If you can navigate your twenties without getting into a significant amount of debt then we think you’re onto a winner. At this age, it’s difficult to think more than a few weeks ahead and enjoying yourself should rightly be your priority. However, getting into serious debt now can set you back for the next 10 or even 20 years and make it harder to achieve your long-term goals. A crucial part of living within your means is to learn how to distinguish between your wants and needs.
Although technically it is a debt, you shouldn’t worry about student loans at this stage. You should see that as an investment in your future.
In your thirties…
- Start saving
If you haven’t already started, now is the time to start saving for your future. Only 12 percent of home buyers in South Africa are less than 30, so you don’t need to worry about being left behind. However, you should set up a pension. Whether you set up a pension privately or contribute to a workplace pension, we’d advise you to start paying into it every month. Understandably, you’d prefer to spend your money on other things, but the earlier you start contributing, the more comfortable your retirement will be.
We’d also recommend you start putting a small amount of money away into your savings every month. From homeownership and parenthood to career changes and international travel, there are lots of adventures ahead and all of them cost money. Wonga has produced an annual savings guide to saving R14,000 a year, which is an excellent starting point.
In your forties…
- Grow your wealth
According to the research firm PayScale, your peak earning years are likely to be your 40s. That makes this the perfect time to think about what you can do to maximise your wealth. Investing in property and exploring the stock market could be options for you, but it’s always best to meet an impartial expert to discuss the best course of action. At this point, expenditure is also likely to be high with children at home, a mortgage to pay and cars to maintain and run. That may not leave you with much in the way of disposal income, but it’s still important to make the most of what you have.
In your fifties…
- Repay your mortgage
Working towards repaying your mortgage should be a key goal for those in their fifties. Ideally, you do not want to enter retirement with mortgage repayments draining your finances. With children leaving home, downsizing may be an effective way to own your property outright and free up money so you can travel, enjoy yourself and save for retirement.
In your sixties…
- Consider your retirement options
This is the time to think about how you can maximise your pension pot. You might be lucky enough to be able to take advantage of a voluntary redundancy package or take early retirement if you have sufficient savings. Industry experts suggest you’ll need between half and two-thirds of the salary you earned before retirement to maintain your lifestyle.
How do these financial goals fit with your long-term aspirations? Please share your thoughts in the comments below.