Family financial planning through the ages

Family financial planning through the ages

Last updated on 5th December, 2018 at 02:38 pm

The minute you start a family, your financial responsibilities mount up. Check out our guide to your key  financial focus points through life’s stages.  

In your 30s

You should have enough financial acumen to be able to support yourself, your children if any, and you must start making provision for your old age. By now you need to be an independent financial thinker, someone who understands how the world of money works and how you can make it work for you. Your life might look something like this: you are establishing yourself in your work environment; you may get engaged and married (making decisions about your marriage contract); you may accrue debt to buy a house and a car; and you may need to start making provision for your children’s studies. Certain financial products can help you on your way:

  • Investment to help you save for a deposit.
  • Bond or finance products to buy a house or a car.
  • Short-term insurance to protect your assets.
  • Life insurance products to settle your debts and pay for your children’s education should you pass away.
  • A study policy in place for each child, preferably since birth or even earlier.

You should also draw up a Will that reflects your wishes; limit your tax burden now and in the future; and settle any debts as far as possible. If you haven’t done so in your 20s, set up an emergency fund with at least three months’ worth of your monthly income to provide for unforeseen expenses.  

In your 40s

Most people are peaking career-wise and are at the height of their earning capacity. It’s also the most difficult financial phase, and the pressure on your purse can be immense. Children complete high school and are aiming for a university education, retirement is looming, and ageing parents may need financial or medical assistance. Besides having a proper financial plan for your life, this is also the time to make sure your family earns as much as possible. Do your teenagers have part-time jobs to help save for their education? Are you and your spouse both working? Get out of debt Any debt must be reduced now so you can channel your income towards saving. Settle clothing and car accounts, get rid of unnecessary costs, and pay off as much on your house as possible. The ideal is to have your home loan paid off by age 60 at the latest. Educating the kids Parents everywhere break out in a cold sweat when tertiary education comes to mind. If you have not done so yet, start saving for their education without delay with unit trust investments or an education savings plan from a reputable financial institution. However, also consider additional options like student loans, scholarships for top students, and part-time study. Again, it has never hurt a teenager to work part-time to contribute to study expenses. Retirement – closer than you think Retirement may seem a long way off, but at 40 it is only another 240 pay cheques (in other words 20 years of work) to the day your employer gives you that final handshake. Without a nest egg, you will be a burden to your children when they reach the age of 40. You have known for years that it’s never too early to start saving for retirement. Put all you can afford, besides your other savings, into a plan such as a retirement annuity (RA), as your contribution at work is never enough to retire comfortably.  

In your 50s/60s

Having your retirement savings on track can provide great satisfaction; however, it is important to continue on that path and increase your savings where you can. If your savings are behind schedule, don’t lose heart. Instead, play catch-up where you can and revise the lifestyle you planned to live during retirement. Make an appointment with your financial planner to establish where you stand in terms of retirement. Consider certain lifestyle changes to stay on track. These could include moving to an area where the cost of living is lower, traveling less, selling your home and moving to a house that is less expensive to maintain, and working part-time instead of a full retirement   By Helen Ueckermann

Want to learn more?

We send out regular emails packed with useful advice, ideas and tips on everything from saving and investing to budgeting and tax. If you're a Sanlam Reality member and not receiving these emails, update your contact details now.

Update Now