Throughout our personal and financial lives there are several different milestones that close one door and open a new window of opportunities.  Usually we start seeking financial planning advice later in life; but if everyone starting planning for their future while they are teenagers I believe that our financial lives would be much more profitable.

Teaching our youth about money management and budgeting in their teenage years will help them become successful young adults.  I wish that I had the chance to enrol in an Introduction to Personal Finance class in high school.  If I did I probably would not have made some of the financial mistakes that I did in my early 20’s.  Each milestone in our personal life usually accompanies a financial life stage.

Here are some milestones in both our personal and financial lives.  How did you celebrate your financial milestones?

Our Sweet Sixteen. This is the age when most of us started working at our first job whether it was cutting grass, babysitting, or working at McDonald’s.  We start earning a regular income and therefore we should also start saving.

At 16 years old we are still able to have a youth checking account, and we should also open a savings account.  For the time being it is ok not to invest our money because the focus is not to grow our money at this point.  The focus in our teenage years is to implement solid savings habits.

Legal Drinking Age. 21 years old is the age when we officially step up from immature adolescence to responsible young adults who need to start planning their future.  At this age we will soon be graduating from college which means that we will soon need to choose our career path.  We may move out of our parent’s home and start taking financial responsibility for living on our own.

The solid financial beginning that we learned in our youth will pay off in our early 20’s as we buy our first car and apply for our first credit card.  This is the age when we should start to learn about the different types of investments.  We should start investing our money slowly to become comfortable with risk.  Once we are comfortable with fluctuations in the value of our portfolio we should focus on high risk investments with growth over the long term.

The Big 3-0. At 30 years old it’s time to grow up and make our first major purchase.  The average person buys their first home around 30 years old. By this age we have been in the workforce for a few years (hopefully at the same company) and we have accumulated savings for the down payment on our first home.  As responsible and professional adults in our 30’s we have made our financial mistakes in the past and learned from them.

Our retirement savings should be a combination of our employee benefits such as a company pension plan as well as an employee profit sharing plan.  We can also contribute a portion of our after salary income into a personal retirement savings plan although we may not be able to afford a lot with the additional expenses that come with buying our first home.

Over The Hill. The focus in our 40’s should be retirement planning and possibly upgrading from our first home to a bigger home.  Our savings should become less focused on growth as we approach our retirement age.  Our portfolio focus should be comprised of medium to high risk investments with a major part (40-60%) of our assets in fixed income.

Time to Retire. At any time between 55 and 65 years we are usually eligible for retirement; of course this depends on our personal financial situation as well as our retirement goals.  By this age our retirement savings portfolio should be invested in fixed income and interest bearing investments.  We have now stopped contributing to our retirement savings; we now need to start withdrawing from and living off of our investments.

Photo by Orso