Financial goals for the decades of life

Every decade of your life brings new challenges, and as your experience, education and expertise increases over the years of working, so too should your income.

As such, the financial goals of your 20s, when you’re finishing your studies and getting your career established, are very different to those in your 30s or 40s and so on as you progress through the decades.

Your 20s

During your 20s, you should aspire to become financially independent. Get a job and pay your own rent and bills. This means learning to budget and live within your means.

Develop a retirement plan and start contributing to it. Start paying off your debt, such as car or student loans, and learn to be responsible with credit cards so you can enter your 30s as debt-free as possible.

Just a few nights in hospital can set you back hundreds of thousands of rands, so get your health insured and start an emergency fund in case of a curveball. It should be enough to live on for three to five months without any income.

Your 30s

Clear all debt not related to property (non-bond debt) and grow the money you have by going to a financial planner to plan investments. If you’re a parent, have your will drafted and get life insurance. Start saving for your children’s tertiary education and for a down payment on a house. Continue contributing to your retirement fund. In your 30s, you should have the equivalent of your annual salary in savings.

Your 40s

Ensure your savings plan for your children’s tertiary education is on track. Re-evaluate your household budget and update your will and policies. Diversify your investment portfolio to spread risk and increase returns and keep contributing to your retirement fund. Now you should have three times the value of your annual salary in savings.

Your 50s

Again update your will, policies, financial plan and household budget. Focus on paying off your house. Consider changing your health insurance plan in line with your age and physical condition. Review retirement annuities and continue contributing to your retirement fund. Now you should have five times your annual salary in savings.

Your 60s

When you retire in your 60s, you should have eight times your annual salary saved. If you’re still happy to work, you should. Or get part-time work to subsidise your retirement annuities. Find out if you’re eligible for government social assistance services to get an extra monthly contribution. Look into trusts to leave a legacy for your children. – Moneyweb