Life is forever changing, but it is perhaps your financial life that changes most drastically over the years. In the beginning, you’ll find you need to spend a lot of money to set your life up. Then, as you reach your later years, you’ll want to start winding down work and living on the money you’ve acquired throughout your life. There are five steps that most people go through to reach a financially healthy retirement:
One of the first big spends you’ll have to cover is your education. Most of us enjoy free education up to the age of eighteen. But if you want a degree, you probably have to pay for it. This can cost thousands up front, or tens of thousands more if you need to borrow. Compound interest is the biggest problem with many student loans. In basic terms, you are charged interest again on the interest charges you’ve already accrued. Reduce your borrowing by working part time and saving hard in the summer months.
Saving for your first property can take years. Frugality is key here to make the whopping deposit you’ll need to put toward your first home. Even so, property prices are exceeding average salaries by so much that a mortgage is unlikely to cover it. The bigger the deposit you have saved, the more chance you have of affording a property. Using high-interest savings accounts can be useful here as the savings process can take so long.
Once children come along, life will change dramatically. Now you have to support your kids, most of your money is being spent on clothes, food, and toys. You might need to buy a bigger house or improve the one you have. Ultimately, you’ll have little to nothing left for savings. But it is at this point in your life that you’re starting to envision your future, long after the kids have grown up. It’s time to consider pensions and savings like self-managed super funds.
Kids’ College Or Early Retirement?
Once you reach your fifties, you might be facing a dilemma for your finances. Ultimately, you want to make sure your kids have the best chances in life. After all, your degree helped you get a better job with a better salary and better pension, right? But you’re just about to make the last mortgage payment on your house. You don’t need to work as hard anymore, unless, of course, your kids need help getting to college too! It’s time to speak to an advisor or check out a website that can help. Blueprint Wealth offers SMSF services and advice on such products that could be used for other investments. Check to see what actions are permitted with your fund and pensions before making a final decision.
No More Work!
When you’ve finally decided you’ve had enough, letting go of your job can feel very freeing. You need to make sure you’ve completed all your investments and that the returns will fund your lifestyle for life. After so many years of hard work and frugal living, this is the moment that you’ll see if it’s paid off. Happy retirement.