My 4 Life Stages of Financial Literacy
All of my adult life since I found out there was a need to become knowledgeable in the myriad of financial resources I strived to increase my personal financial knowledge to gain financial freedom and live out a comfortable life. I’m embarrassed to even say at what age this realization began to sink in. I initially, and now with my wife wanted to put ourselves in a position where we’re able to make purchases of items and services we need and/or desire. Since we have begun accumulating savings for unexpected expenses, retirement, and leisure activities we find ourselves able do these things. Yet even today, we seek-out ways to gain greater financial knowledge to help maximize our assets and give us a greater understanding of our financial responsibilities and personal money management that will forever occur throughout our lifetimes.
The key for my wife and I was to learn how credit works, the importance of developing a budget and living by that budget to control expenses, establish realistic financial goals, make investment decisions to protect ourselves against risks seen and unforeseen. Doing all these things has left us with a level of comfort for the foreseeable future. Using the right personal money management skills have left us free of living in a panicked state about where’s money coming from to pay the bills, and has decreased the stress level in our relationship. More important to the development of positive personal money management it has increased the level of meaningful communication in our lives.
As I look back on my life and forward into my future their were stages I should have gone through, stages “I wish someone would have told me about.”
Through my life’s experiences and much research, I gained knowledge and skills I’d like to share with you bringing together my opinions of stages in life for personal financial money management skills.
Age 18 to 34
It is important to determine your financial values and establish financial goals, such as reduction debt how to live debt free. Learn how to earn, save, share, invest and spend your money. Find ways to accumulate savings for a car, home, any major purchase you want to make and your retirement plan. Limit the purchase of personal-use items to needs as opposed to wants and most of all control your credit card debt, get in the habit of paying the monthly bill off completely. Take time even at this young age to establish a will. Life is not promised!
Age 35 to 50
Increase investments and retirement savings from any salary increases you receive, remember “out of sight out of mind” this will help you to continue building a financial base. Stay on track to achieve your goals use the S.M.A.R.T. Goal system to help you. Maintain emergency funds. Review your spending and make adjustments if necessary. Invest in college savings plans for yourself or your children, such as a 529. Don’t make the mistake of sacrificing your retirement savings, to pay for your child’s college education, there are too many scholarships out there. Teach yourself and/or your children to seek out the many scholarships and actively apply for them, commonly missed organizations with scholarships are local service groups i.e. Elks Club, Sertoma, Women’s Groups, Veterans Associations, Book Clubs etc., when searching never underestimate any local service group. You must be and remain aggressive as well as assertive when looking for scholarships. The squeaky wheel get the oil!
Age 51 to 69
Identify your planned lifestyle upon retirement, including estimation of expected living expenses and income during retirement. Begin to reduce or limit outstanding debt, remember you want to enjoy these years not work for them. Review accumulated retirement accounts (Employer contribution plans like 401(k)s, individual retirement accounts, non-retirement accounts and estimated Social Security benefits). Explore ways to bring in passive income. At this point living on a budget and understanding that budget becomes very important. Attempt to have your reoccurring bills set up in a way you can budget them out. I’m going through this now.
Age 70 to 87
I’m in the process of planning this stage of my life with my wife. Together we must learn to control reoccurring living expenses and the rate of our retirement income and withdrawals from our retirement accounts. We will regularly review our estate plan, including our will and/or trust.
At each stage, the key to “having what you need when you need it” is learning how to use personal money management skill and concepts to your advantage, and understanding how they relate to your financial well-being. Remember — use your money wisely now, to build freedom contentment, wealth, and power.
What stage of Personal Money Management are you dealing with? Do you have any tips that can help myself and the readers? Leave a comment below!