When is the right time to get advice?
There’s no bad time to seek financial advice. But here are five situations where it’s more important than ever.
With this in mind we’ve broken down each decade to help you understand some of the financial considerations.
Many people have just entered the workforce at this stage and most people will still be renting. While some people in their twenties have formed long-term relationships many have not yet had children. For the majority, home ownership and families are still a thing of the future.
The major financial focus for this group is to eliminate debt that may have been accumulated while at university/college (HECS–HELP, credit card debt, student loans etc.), and to start saving for a deposit on a home.
Many people in their thirties are in long-term relationships and have children. They have most likely bought their first home and some would be considering renovations.
The major financial focus during this stage is usually on reducing mortgages as much as possible...to keep money available for emergencies that are more likely to occur
The major financial focus during this stage is usually on reducing mortgages as much as possible.
People in this age bracket need to be careful not to over extend themselves financially, and aim to keep money available for emergencies that are more likely to occur than when they were renting and had no children.
Those without children or a mortgage, who are looking to get ahead at this stage, may consider investing in the share market.
It may sound obvious, but the financial position in this period will be largely determined by how much spending restraint has been shown during the previous decade. For disciplined savers there is a good chance of being able to upgrade to a bigger home at this stage of life.
In saying that, the forties can be difficult for couples who have children in their teens as they generally incur more costs at that age, especially if they attend private schools. Careful budgeting is required for people in this position.
Those who don’t have children and have enough money for their day-to-day expenses may start thinking about diverting more of their money into superannuation.
By this stage many people will start experiencing more sustained wealth creation due to fewer family costs. The reason for this is because most will have children at an age where they are becoming financially independent.
Generally salaries are also higher in this bracket. Putting more savings in superannuation is very common when people are in their fifties given the current tax incentives that come with it. This is also an opportunity for many to start their own individual business.
By this stage, many people will find themselves in a position with more time and money. The kids have finally flown the nest, they may be working fewer hours and have more time to travel. However, the financial focus is generally to invest savings to generate a retirement income and to maximise the Age Pension. People in their mid-70s may also be looking at ways to fund retirement home living and estate planning.
Read ‘What’s your 65th birthday wish’ for more on how to make the most of the superannuation system leading into retirement.
Regardless of which stage you are at, it’s important to make a financial decision based on the assessment of the risks and opportunities that exist in your life. As you can see, these seem to change with each decade.
A financial adviser can help you find the right investment opportunities for your individual situation and for each life stage.
This article is based on a post that first appeared on the CommBank blog.