Unlocking Financial Secrets for Different Life Stages

One of the keys to financial success is adopting the right strategy at the right time.

“Each phase of our life represents a unique opportunity to create strategies that can maximise your financial potential,” says Christine Swanson, Founder and Financial Adviser at Prominent Financial. “From the enormous potential of compounding for young adults to enjoying the single life and the importance of protecting your family, to supercharging your super before retirement, and vital investing strategies for your golden years.”

As you move through these various stages of life, here are some tried and tested ‘secrets’ that will help you build and protect your wealth.

Teens and Young Adults

Compounding interest has enormous potential, a little bit invested now or regularly can grow into a significant amount over time. Most young people don’t want to think about life in 30-40 years, but if a 15-year-old starts saving just $10 per week into an investment returning 5% per annum (after fees and tax), by the time they turn 65, their total outlay of $26,000 will have grown to over $116,000, just imagine what more would do! Contributing those savings towards a tax-favoured vehicle such as superannuation may provide an even higher final return.

Single Life

Saving is still a key strategy as careers are established, but usually with a shorter timeframe and a specific purpose in mind – buying a home, for example. Be mindful of the allure of too many luxuries, and avoid taking on any high-interest debt, such as credit cards or interest-free loans. Rather, set a budget and have several accounts designed for various expenses and savings plans that commit to your longer-term financial goals, the ‘secret’ to financial success is sticking to your plan.

Family Focus

The time of kids and mortgages is also the time of peak responsibility. It’s likely that your most asset is your ability to earn an income, and illness, disability, or death could deprive you and your family of financial stability. The financial consequences of each of these possibilities can be managed with a blend of income protection, total and permanent disability, trauma, and life insurance, the ‘secret’ is balancing the financial risk with the financial affordability.

Preparing for Retirement

With the kids off your hands, maybe debt under control, and earning capacity often at a peak, a wealth of opportunities open for pre-retirees. Enjoy some lifestyle spending, but don’t forget to supercharge your super in anticipation of a long stress-free retirement. For additional tax benefits, look at making additional tax-effective super contributions. If you have any remaining debt the ‘secret’ may be in evaluating whether it’s financially a better outcome to leave debt repayments low and poor more money into super that should earn and compound at a higher rate, delivering a better financial outcome.

Golden Years

Australians are among the leaders when it comes to enjoying long and healthy retirements. That means retirement savings need to last, so: a) don’t go too hard too fast in spending your hard-earned super, and b) don’t invest too conservatively, as you may need to spend more than you earn. On the plus side, if you’ve employed the above secrets in each phase of life, you should be in good shape to enjoy a long, financially comfortable retirement.

Those who retire financially comfortable live healthier and happier lives, financial stability allows us the flexibility to make better decisions about our health and wellbeing, not worrying about money provides a stress-free lifestyle.

A Final Thought

Whatever your stage of life, there are many things you could be doing to secure your financial future.

Christine emphasises, “The most crucial step is to start early, have a plan in place, and be consistent with reviewing your plans as your situation changes. Financial security is not a matter of chance but a matter of choice. The right advice and planning can make all the difference.”

To learn more, contact our experienced financial advice team here.

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