The Ultimate Timeline for Your Financial Milestones
Financial independence is always a great goal to achieve. Who doesn’t want to have assets that generate income that’s at least equal to your expenses? But tough times may come, and we have various ways to overcome this situation to achieve financial freedom. It can be through a loan app or borrowing money from banks and other lending institutions.
But before you can achieve this kind of relatively successful financial situation, you will need to have a certain level of awareness to gain effective results from correct money management. If you don’t have the slightest idea how to do this, you can always refer to resources that are available both online and offline. These could be indispensable in your quest to gain financial literacy that could free you from worry.
It can be quite disconcerting to know that there is a high level of illiteracy in people across age brackets worldwide. In fact, only one in three adults shows an understanding of basic financial concepts. Despite the wealthy and well educated having higher financial literacy, it’s clear that there are still billions who still can’t adapt to the changing financial landscape.
Financial literacy rates differ in characteristics such as age, education level, gender, and income. Around the world, 35 percent of men are financially literate versus 30 percent of women. This kind of gender gap is found in both advanced and emerging economies.
Age also plays a factor in financial literacy. Rates are lowest among the youngest and oldest adults in major advanced economies. They are lower for those older than 50 and are lowest for those beyond 65. However, the pattern is different for major emerging economies. Adults 65 and above have the lowest financial literacy rates of all age groups, but the young have the highest knowledge.
Regardless of the criteria, your plan should include hitting financial milestones so you can be sure that you increase your literacy and secure your future. To do this, you can set a timeline from the moment you start earning money up to retirement. Here’s how it should go:
Managing your finances as soon as you enter adulthood and start earning up until the time you plan to retire can be compared to a marathon: to reach your goal at the expected time, you need to have the right mindset. This can help you focus on being aware of your pace and distance along the way.
Setting and hitting financial milestones as you get older is ideally what you should aim for. This helps you stay on track, which would eventually make you realize your financial objectives and achieve comfort late in your life.
Age 20
Your 20s would be your first foray into the professional world, which means this is the time when you’ll start earning your own money. It’s also an excellent time to set your financial goals and decide on your approaches to accomplish those milestones.
You can start by opening a savings account at the bank of your choice. This may be exciting times since you’re earning your own money and you’d want to spend it on things you probably don’t need, but saving should be a priority. Having your own savings account can encourage you not to put it all to waste.
But first, you’ll have to look for a decent job that fits your qualifications. To do this, you must plan which direction you want your career to go. Pick a good organization that’s going to be instrumental to the start of your employment.
Being financially responsible is a must. And when you’ve figured out your budget, you can begin preparing for your future. Invest in insurance and start contributing to your retirement fund. Starting early in the game will allow you to reap better benefits in the long run.
Age 30
The thirties are when things get serious and expensive life events happen. People get married, have kids, and buy a home. These significant milestones mean that even if your earnings grow, you may find it challenging to figure out how to save for retirement or avoid getting into debt.
An excellent way to deal with this is as your salary increases, you figure out ways how to live below your means and save whatever extra you make from raises and bonuses. Remember, a home is one of the largest investments you’ll make in your lifetime and paying off a mortgage can reach up to 30 years.
Raising children is another big investment that requires careful financial planning to be able to attend to their needs. Keep in mind that it gets more expensive as they grow older and when you start providing for their education. In case of emergencies, it’s always a good idea to explore loan options such as digital credit app Cashalo to meet your financial needs. Cashalo offers fast, easy and affordable loans with just a few requirements.
Now that you’ve started a family, some or even all may be dependent on your income, so it’s a good time to explore life insurance policies and start creating a will. Getting life insurance this early allows you to lock in a lower rate while you’re still young and healthy.
Once you reach 30, it’s time to increase your contributions for your retirement fund. If you started at 10 percent in your 20s, you could increase it to not less than 15 percent.
Age 40
Middle age is when you’re more established in life, and your finances should be able to reflect that. This will help you aim for more critical milestones.
Hopefully, your debts are kept at the minimum. This includes car loans, credit card bills, and other consumer debt, which allows you to focus on other essential aspects, such as your kids’ college education. Have a plan in place such as deciding on where to enroll them, so you have an idea on how much to spend on tuition.
Another great goal to work on at this age is to have twice your annual income saved in your retirement accounts. You can augment this by finding other sources. You can do this by starting a small business or perhaps take on freelance projects that fit your skill.
Age 50
Time flies fast. And when you’re close to the end of your professional life, it’s where everything starts to slow down, so take the necessary measures to max out your retirement contributions to help prepare you for retirement. Meet your financial advisor to help you figure out which options that work best for you.
It would be ideal to finish paying off your mortgage to give you more financial freedom, which you should take advantage of for your retirement. By this time, it would be best to have saved around four to five times your annual salary for a more comfortable life as a retiree.
Age 60
Being a senior citizen is the time when all your savings and smart planning should be paying off. You can fine-tune your retirement goals according to your preferred lifestyle as you enjoy the rest of your days. You can consider downsizing your home or move to a smaller house to lessen your expenses. Finalize your will in case you wish to alter a few details. If needed, you can make other significant changes as you transition towards retirement.
Review your life insurance policy to make sure everything is in place. Look into long-term care if you deemed it suitable for yourself and your spouse if married. Ideally, this should be in place before you need it.
Planning Is Key
All this may seem daunting, but you’ll have to step back and look at the bigger picture to help you put things into perspective. Keep in mind that there is no cookie cutter way to achieve success, so you don’t have to be discouraged if you passed these milestones. What you can do is take a moment to think about where you are and how your finances are doing, so you can make the necessary adjustments.
The key is to always make deliberate choices when it comes to your finances. You should also be aware of these milestones, so you can never lose track of your financial goals up until you settle comfortably into retirement.
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