As you consider money management it is important to realize that life runs in phases. Your needs and planning will need to be adjusted according to the phase that you are currently in. Recognizing these phases and your responsibilities while in these phases will help you to plan for a more secure future.
The first phase is that of a young professional or worker. In this phase you should work on getting out of debt. It is also a good idea to begin saving for retirement aggressively at this phase of life. The more you save now the less you will need to save in the future. This is a great time to save up a down payment for a home. It is also a time when you can afford to have fun and travel.
The next phase is that of a newly married couple. The focus changes a little bit as you merge your finances with your spouse. You should still be saving aggressively for retirement. You will want to focus on getting out of debt. This is a great time to buy a house and begin to prepare for your future children.
The next phase is that being a parent to young children. You may have less money available to you to get out of debt and to put towards retirement. However you need to continue to do these things. You may also want to begin saving money for your child’s college education. You may also want to save up for family trips.
When you reach the phase of having teenagers and children in college, children become even more expensive. You should still be putting money towards retirement. You should also be working on having your mortgage paid off. Your disposable income may decrease as you help your children with college.
When you are an empty nester you should save aggressively towards retirement. You should also aggressively pay down your debt so that you can truly enjoy your retirement years. At some point during this phase you will retire. This is a time to relax and enjoy the fruits of your hard labor.
Although these phases are broken down pretty specifically, I realize that not everyone will go through every phase. Some people marry while in college, and so never spend time as single young professionals. Some people begin having children right away and do not spend a lot of time as just newlyweds. The important key is to keep in mind your long-term goals and plan accordingly.
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