From one’s point of view, there can be different stages in life with respect to money. Remember, this is only perspective – in general for a common man.
As one goes through different stages in life, the financial condition & goals are likely to change. They cannot stay constant over the entire life span. What holds good for you at early employment stage may not hold true when you are at the peak of your career. What is good for you at the peak, will likely change when you retire. If you manage your money well, you can strike a balance in all these years and can have a good plan for the years to come.
Initial career years
From an Indian context, most of the parents pay for the kid’s education till University stage. So the first stage I am taking is early career years. The immediate goals for this stage may include buying a vehicle (a car or a two wheeler), planning for home, home furnishing, building a good credit history. However this might change soon as kids have started moving out on own soon and since education has become quite expensive, education loan is gradually become a trend now.
There is lot of energy and dreams at this stage. This stage decides how you will shape up your life, hence decisions taken are important and have long term impact on your life.
Starting a family and career building
One may switch jobs for earning higher compensation to increase financial kitty, growing savings, buying home, start to plan for retirement funds, start a family, begin saving for kids education, buying adequate insurance etc Income typically rises in these years.
The right investment decisions taken at this stage leaves a long lasting impact on your life. Also since these are initial years, money accumulated and invested wisely comes handy at a later date.
Your expenses more or less stabilize now due to high income. Kid’s higher education, their marriage , prepayment of home loan, any other long term loan prepayment, putting away more funds for retirement, taking professional help for financial planning/ retirement planning. At this stage you become more organized for retirement planning.
Early retirement years
You are officially retired, but you may want to work for sometime more as you are in good health. This is just to support the lifestyle, travel. You now work towards consolidating the retirement savings into a regular monthly income, managing taxes, and do everything in making your savings last till you breathe last. Preparing will also come during these years.
You may become less mobile due to age and health issues. The goals include planning for assisted living (trend is picking up in India now), tax optimization, efforts to make your money / savings outlive you. Prepare yourself for this stage well in advance when you are at stage 3 & stage 4. You can consult people who are undergoing stage 5 and plan well in advance.
To sum up, your goals will change with each stage and if you are well prepared mentally for each stage, you can plan well. A well planned, goal oriented life will put you in less stress financially and ultimately make you sail through your retirement years.
The ultimate retirement goal for anyone it to outlive his/her retirement fund.
If you plan well at different stages of your life, this goal is quite achievable.