Copyright independent
From first pay cheques to final pensions, every stage of life brings fresh financial priorities - and pitfalls. Whether you’re just starting out or beginning to wind down, the key is to make your money work harder, not just longer. It can also pay to know how priorities might change as you get older inand prepare for them ahead of time. Here’s how to stay in control of your finances at every age. The earlier you start building good financial habits, the better. Zoe Brett, financial planner at EQ Investors, says: “Your 20s are about building a good foundation. Build some savings for emergencies - a good rule of thumb is three to six months’ expenditure. Avoid getting into debt as this can be a crippling cycle and incredibly difficult to get out of, so it’s best not to go there in the first place.” It’s tempting to spend your first real income on fun and freedom, but even small steps now will compound over time. Set up a direct debit into a savings account every pay day so you save without thinking. Brett recommends investing early too. She says: “Start investing into a tax-efficient ISA in a simple investment strategy such as a few index funds or perhaps a managed fund. Even just small amounts will add up.” And if your employer offers a pension, grab it with both hands. “Most pension schemes will match your contributions to a certain level so take advantage of this free money,” Brett says. Your 30s can feel like financial whiplash with a mix of growing income and growing responsibilities. From mortgages and childcare to career shifts, everything costs more. Brett says this decade is about “building upon those great foundations of your 20s”. She adds: “It can be tricky to juggle everything, so build a budget that works for you and stick to it. Try to increase your investment and pension contributions. A good rule of thumb for your 30s is to contribute 15 per cent per year of your income, including employer contributions.” This is also the time to protect what you’ve built. “Ensure you have adequate protection in place such as life assurance, critical illness cover and income protection,” says Brett. “This will help protect you and your family if the worst happens.” With savings and investments starting to grow, she suggests seeking professional guidance. “At this stage it is prudent to engage a financial adviser and ensure your portfolio is suitably diverse,” she says. By your 40s, you’re likely earning more than ever but also feeling squeezed from all sides. You might be supporting children while helping ageing parents, all while trying to secure your own future. “Your 40s usually bring your peak earning power,” says Brett. “Try not to give in to lifestyle inflation - use the extra income to solidify your financially unburdened future rather than keeping up with the Joneses.” If you have debts, focus on clearing them, and consider overpaying your mortgage if you can. This is also the decade to turbocharge your pension and investments, when compounding returns can still make a meaningful difference. Brett adds: “If you haven’t done so already, engage a solicitor to prepare a Will and Lasting Power of Attorney, particularly if you have a young family.” If you do, ensure you’re also teaching your young ones to handle their own finances too. With retirement on the horizon, your 50s are about fine-tuning and turning decades of saving into a plan. “Your 50s are where you start thinking about how you wish to spend your retirement,” says Brett. “Work with your financial planner to understand your target income in retirement and ensure you have enough to sustain this.” This is the decade for focus. “Continue to fund your investments and pensions. Discuss your risk approach with your adviser - depending on your planned retirement income strategy, it may be a good time to start de-risking your assets,” she says. Then again, if you’re not likely to retire until closer to 70, you may still have a long runway in investing. But don’t forget the basics. “Get a State Pension Forecast to check your State Pension entitlement,” Brett advises. Review your protection policies too as you may no longer need the same cover once the mortgage is gone and the children are financially independent. You’ve made it towards retirement, and now comes the emotional shift from saving to spending. “The mental shift from working to retirement can be daunting,” says Brett. “Suddenly going from accumulating wealth to spending it can feel uncomfortable. Here you need to trust in your financial plan. You’ve done the hard work and now it’s time to enjoy it.” That means drawing down income strategically, keeping an eye on inflation, and ensuring your money lasts - but also giving yourself permission to live a little. Whatever your age, financial confidence comes from knowledge, not luck. Brett says: “Educate yourself with the right resources. There are far too many irresponsible dramatic news outlets and influencers that sell you on doom and gloom. “Recessions are not going to end the world - in fact they create investment opportunities. If something sounds too good to be true, it probably is.” In short, block out the noise, focus on what you can control, and make decisions that serve your long-term goals. When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.
