Moving through life – stage by stage

Life is filled with twists and turns and you will go through many life stages along the way. This makes for an interesting journey where your priorities and responsibilities constantly change and evolve.

Blissful beginnings

Initially we start off life as children under our parents watch. This is a nice, safe environment with few responsibilities or stressors. Our parents pay for all our needs, and we have time to grow, learn and develop into balanced young adults. The only finances we’re really involved in, would be our allowances and how we go about spending it. So we start our financial education on a small scale.

Moving on and out

After high school, and all that it involved (extra-murals, sport, social activities) we leave home. This can be for different reasons – studies, work, marriage.

But for the purposes of this article, let’s start with studies. You leave home to go to a university where you go on to complete your studies. As a student you will most probably still have the financial support of your parents, but perhaps with a part time job. In this job you will learn the ways of the world – what you put in, you will get out.

All of a sudden you will find yourself with some responsibilities you didn’t have in the past. You have to buy food, maintain a flat and ensure you are safe and healthy all the time. You also have to budget to make sure your pay cheque and/or allowance lasts you through the month.

The big life

After studies, life becomes a bit more complicated. As you start your first real job, you get introduced to the concept of a pension and your own medical aid. If your job doesn’t come with these perks, you have to take them out yourself, and it helps to speak to an advisor to ensure you get the best products for your needs.

You also realise that you need to get a car. Yes, some people are lucky enough to have received a car from their parents, but most aren’t. So let’s say you have to buy a car, start paying for insurance, petrol and maintenance. All these things cost money, so you really need to make sure you stretch your rand.

You also need somewhere to stay – so you’ll need to find a flat or small house somewhere. At this stage in your life you can usually only afford to rent. So your responsibilities are not only for your groceries, car, petrol etc. but also for a place to stay. You have to budget to make sure you can pay your rent money and still have enough left for food and clothes.

No more single

The more independent you become, the more responsibilities you get. Say the next step in your life is to find a partner. A serious relationship usually leads to marriage. As you now need space for two people, your small flat won’t cut it anymore, and you decide to get a bigger place. You look around a bit and finally find a house to share. Now you own a mortgage, and the responsibilities are even more.

Up and up

You now have to take care of two people’s needs. Some expenses double. You get medical aid for both of you (luckily combined medical aid is cheaper than for two individuals on their own), take out additional Retirement Annuities and a policy or two that will pay out later in life. Life in the fast lane also takes a turn as you get a better job. You find something that can sustain your new lifestyle a bit better and start climbing the corporate ladder.

Family life

As life improves, you two decide that it’s time to have children. Starting off, it’s just one baby, but later you decide to have another. This leads to the need for a bigger house and a family car. Both mean more expenses and more responsibility. You also need to draw up a Will, to ensure everyone’s taken care of should you, your spouse, or both of you pass away. Your, and your family’s financial future become a priority. You go to see a financial planner and set up some savings vehicles to ensure you will be adequately covered later in life.

With the little ones around, you need to have cash for nappies and formula, plus pre-school or a nanny. The children start growing older, and you find them primary schools. This costs quite a bit, and you might start thinking of getting a better paying job. You look around and hopefully find what you’re looking for.

Stability

Things then stabilise for a while as your children go through school. Yes, you’ll have to fork out cash for extramural activities and the likes, but your house and car should be adequate for the next few years. Work is going well, and you slowly work yourself up to a really good, well-paying position.

Their turn

The next stage is when your children leave home. If you’re in the lucky position to be able to buy them cars, this will put some strain on your finances. If not, you’ll still have to pay for their educational needs (university or college) and you’ll need to work carefully with your money. Here the cycle you went through starts for them, and your own life becomes less complicated.

Once they’re on their feet, you can start to relax. Things will be calmer and you’ll find yourself with more cash on your hands. You may consider buying a smaller place for the two of you, and even downscaling your car/s. Life is less complicated and you start to dream of retirement.

Retirement ahoy

As you enter this latter time in your career life, you both retire and find yourself with a lot of time on your hands. With much planning you’ve made sure you are in a good financial position and you spend your time with family and your new grand children. Life is good and you know you made the right decisions along the way.

Bottom line

Only by planning and always working carefully with your money will you be in this position at the end of your working life. Make sure you get good advice and never make rash decisions. The success lies in the details.

Categorised in: Financial Planning

This post was written by thys