Regardless how many candles you blew out last birthday, there’s no time like the present to get your financial ducks in a row.
In your 20s…
… Be careful with credit. “People in their 20s tend to be more focused on gratification today and paying for it tomorrow,” says Brontie Chambers, Manager, Products and Member Value, Community CPS Australia. “We often see young people run into trouble with mobile phone bills, credit cards and interest free loans that attract massive interest rates if you miss repayments.”
… Get a budget. Your 20s are an excellent time to learn how to budget and manage your money before larger financial responsibilities kick in. “Make sure you don’t spend everything you’re earning,” Chambers warns. “It’s important to budget for things like bills and day-to-day expenses, but you should also budget to save. It doesn’t have to be a lot, but every little bit counts.”
In your 30s...
… See a financial planner. A financial planner can help you work out the best ways to invest your money and meet the financial demands of having a young family and owning a home.
… Get prepared for property ownership. “Identify how you’ll pay the initial deposit and check out what type of home loan suits your circumstances,” Chambers says. “While purchasing property might seem out of reach, there are ways to do it and you don’t have to be on the rent treadmill forever.”
… Consider insurance. For many people, insurance rarely goes beyond home and contents, but Chambers advises: “For the benefit of your family, it’s very important to make sure you have the right insurance in place in case you get injured at work, lose your job, get sick or pass away. You may want to consider life insurance, or a form of risk insurance for a smaller price.”
In your 40s…
… Make careful use of your disposable income. Once your kids start growing up, you may find yourself with more “play money” each week. “Make a decision about what you want to do with that money,” Chambers says. “For some it might be overseas travel, while others may want to pay off the mortgage.”
… Give your investments a health check. “Get your financial planner to look at your investments, including property and shares, and make sure they are working for you,” she adds.
In your 50s…
… Get on top of your super. This is the critical time to get advice about retirement. People over 55 can take advantage of a combination of salary sacrifice, lower superannuation taxes and transition to retirement allocation pensions to really boost their super savings. “If your home loan is not already paid off, you’ll also need to make a decision about whether to pour any extra cash into your super or get the mortgage paid off,” Chambers says.
In your 60s…
… Ensure you’ve diversified. “The Global Financial Crisis highlighted the consequences of what can happen if you have all your investment eggs in one basket,” Chambers cautions. “It’s important to have a good blend of investments, such as property, shares and term deposits, to reduce any risks and maximise your returns.”
… Downsize. Many people in their 60s no longer require a large family home, so it’s worth thinking about a smaller property that’s easy to maintain and get to. “If downsizing is for you, get your financial planner to assist in adapting your financial plan to your new lifestyle,” Chambers says. “Think carefully about the style of property you want, where it is, and most importantly, how you want to live.”