9 ways your finances should grow with you


There's no doubt that as each decade passes, different goals will take priority. Whether you're looking to spend more time with family, take an overseas vacation or buy your first home, you'll need to put the right financial arrangements in place to achieve your goals. Fortunately it's never too early, or too late, to develop the good financial habits that will get you there.

In your 20s: Get set for the future

Many people finish studying in their early 20s and take their first career steps. As a student or young employee, finances can be stretched and saving isn't always the top priority. So it's doubly important to establish the right habits once you enter full-time work. Getting off to a good start in your 20s will help set you up for a comfortable future. Here are three things to focus on.

  1. Learn to budget
    Living within your means and managing your cash flow is one of the best financial skills you can learn. Mastering this in your 20s will give you a solid base to work towards 'financial security' in your 30s. This means ensuring your incomings exceed your outgoings, having manageable debt and regular savings. Also include regular superannuation contributions in your budget.
  2. Pay off your student debt
    Do you owe the Government, your university, college or TAFE tuition fees? Considering paying off student debt may provide closure and allow you to focus on how you actually want to invest your money. Remember that student debts can affect other loans, such as mortgages. Securing stable, well-paid employment and making extra repayments will help eradicate the debt sooner.
  3. Save big
    Set yourself a bold savings goal and learn to budget to meet it. It might be a dollar value you have in mind, or you might want to challenge yourself to save for a car, a property deposit or start-up capital for your own business. Consider a high interest account, such as a term deposit, to help you.

In your 30s: Consolidate and grow

You've made the most of your 20s to get on top of your finances, paid off your student debts, accrued some savings and made solid headway on your career. You may have married or started a family in your late 20s too. Now you're looking forward to a decade of consolidation and growth, filled with some big life changes and financial decisions. Here are three financial goals to focus on this decade.

  1. Buy a home or property investment
    Home ownership is still a major life goal for many Australians and our greatest source of wealth. As a nation, home ownership accounts for 41 per cent of total household wealth1. Between the ages of 30 and 39, the majority (41 per cent) of people buy their first home2. With large deposits required to secure an average home in most capital cities, you'll need to make entering the property market a real focus for your savings to achieve this goal.
  2. Develop a family budget
    Financial stress can have a big impact on family, so apply the lessons learned in your 20s to manage your family budget. Budgeting tools, like the MoneySmart budget planner, can help you understand and plan your expenses.
  3. Create an investment portfolio
    Your 30s are a great time to think seriously about generating additional income streams from investments. This can eventually allow you to work less and spend more time with family, as well as forming part of your retirement plan. Consult a qualified financial planner who can advise you on the best options for earning a return on your money. Each investment option carries its own level of risk and reward, and is suitable for different timeframes, so make sure you do your research before investing.

In your 40s: Financial freedom

You spent your 30s setting up the family budget and building additional income streams. Your family may have expanded and you may now be the proud owner of a mortgage. Now is the time to start thinking about protecting your family and assets, and how you can maximise your investments while ensuring you have capital to fall back on in an emergency. Here are three goals for this phase of your life.

  1. Family finances
    Consider saving for your children's future with a trust fund. A trust fund allows you to set aside money for minors that they cannot use until they reach a certain age, in some cases a certain life stage, such as for study. Speak to a financial adviser to consider the costs, time and effort in managing a trust with any benefits.
  2. Life insurance
    Life insurance can ensure your family is taken care of in the event of your unexpected death or disablement. Also consider income protection insurance that will cover loss of income due to unexpected unemployment or long-term injury.
  3. Get serious about superannuation
    You may have years to go in your working life, but the time to review your superannuation strategy and increase your contributions is now. Most super funds allow you to adjust your investment according to risk and yield, so consider your risk appetite and the time you have to accumulate super returns, then adjust your strategy accordingly. For many people it makes sense to take risks early on and then reduce risk as they close in on retirement.

Fortunes change and so do your needs and goals as you grow older. You'll get the most from your money if you match the right products with your requirements at the time.

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