July 30, 2021
How to Build Wealth at Any Stage of Life
In today’s time, there’s so much access to information and tools about how to build your wealth as you hit new life milestones. But unfortunately, at times, it can feel confusing as each life stage brings different needs. The good news is, there are steps you can take along the way to help you better prepare yourself for the next evaluation of your goals.
1. Early Career
It can be overwhelming as you look at student debt, think about buying your first house, and consider contributing to retirement for the first time. But where do you begin? The most crucial step is to start by simply creating the habit of saving and realizing you don’t have to have it all figured out. To help you get started, consider how small automatic payments to your own savings account can make saving easier and multiply for a significant impact later on.
Pro Tip: Automate your savings by putting a set amount away each month. It doesn’t matter if it’s just $10, building your savings backbone early will help you prioritize your current and future spending.
2. Young Family
Being a young family is often about significant changes, which can mean thinking through new and adjusted priorities. Your spending is likely to increase quite a bit to accommodate your new needs, such a childcare, moving into a larger house, or seeing your grocery bill go up as you grow your family. For savings, we often hear the debate around priorities like funding retirement first or starting a college fund. While you often can’t do everything all at once for your savings, defining your main priorities and finding a good balance is key to financial peace of mind.
Pro Tip: Competing priorities make it more challenging to manage money. Don’t forget to keep savings for your goals, but also consider other aspects of a healthy financial life, such as building an emergency fund and not taking on too much debt.
3. Mid-Career
By this stage of life, your family and even your career have changed since you began your journey. For many, their salary reaches a peak during their mid-career. Enjoying an increased salary can come with challenges, such as pressure to increase your spending or seeing your peers spend their money on items like cars or the newest fad. That’s why it’s vital to reevaluate where you are and look to make key adjustments. For example, as your income has increased, you can now choose to accelerate your savings, while still enjoying a splurge on a family vacation or purchasing the newest tech every now and then.
Pro Tip: Watch for the rising standard of living, and don’t feel like you have to keep up with the Joneses.
4. Late Career
In your late career, retirement has become a reality as you look to increase your effort on savings and finalize goals for what retirement looks like. Painting a clear picture of what you need can be the impetus and motivation for finishing strong.
Pro Tip: Consider future income sources to support you in retirement.
5. Retirement
Stepping into retirement can be challenging as you switch your mindset from saving to distribution. It means that once you get to retirement, your hardest decisions are thinking through questions like:
These are all critical questions that can require a great deal of thought and may benefit conversation with a trusted financial advisor.
Pro Tip: Maintain a long-term focus and be confident that you've taken the right steps to build your wealth.
Start your financial journey by establishing essentials first.
Every stage of life has different financial needs, and it’s essential to begin your journey with the proper guideposts to help you. Two Important ones to keep In mind are:- Creating an emergency fund: Rather than getting off track when emergencies come your way, create a fund to alleviate the pressure and give you peace of mind.
- Prioritizing Debt Payoff: While not all debt is bad debt, such as taking on a loan for a mortgage or to invest in your education, getting ahead with building wealth starts with balancing your debt payoff to savings buildup. You can start by evaluating which accounts to pay down first, whether you choose to tackle one at a time or multiple at once.
How to build wealth in different stages of life.
Since there are different priorities in every stage of life, here are some essential keys in five common life stages:1. Early Career
It can be overwhelming as you look at student debt, think about buying your first house, and consider contributing to retirement for the first time. But where do you begin? The most crucial step is to start by simply creating the habit of saving and realizing you don’t have to have it all figured out. To help you get started, consider how small automatic payments to your own savings account can make saving easier and multiply for a significant impact later on.
Pro Tip: Automate your savings by putting a set amount away each month. It doesn’t matter if it’s just $10, building your savings backbone early will help you prioritize your current and future spending.
2. Young Family
Being a young family is often about significant changes, which can mean thinking through new and adjusted priorities. Your spending is likely to increase quite a bit to accommodate your new needs, such a childcare, moving into a larger house, or seeing your grocery bill go up as you grow your family. For savings, we often hear the debate around priorities like funding retirement first or starting a college fund. While you often can’t do everything all at once for your savings, defining your main priorities and finding a good balance is key to financial peace of mind.
Pro Tip: Competing priorities make it more challenging to manage money. Don’t forget to keep savings for your goals, but also consider other aspects of a healthy financial life, such as building an emergency fund and not taking on too much debt.
3. Mid-Career
By this stage of life, your family and even your career have changed since you began your journey. For many, their salary reaches a peak during their mid-career. Enjoying an increased salary can come with challenges, such as pressure to increase your spending or seeing your peers spend their money on items like cars or the newest fad. That’s why it’s vital to reevaluate where you are and look to make key adjustments. For example, as your income has increased, you can now choose to accelerate your savings, while still enjoying a splurge on a family vacation or purchasing the newest tech every now and then.
Pro Tip: Watch for the rising standard of living, and don’t feel like you have to keep up with the Joneses.
4. Late Career
In your late career, retirement has become a reality as you look to increase your effort on savings and finalize goals for what retirement looks like. Painting a clear picture of what you need can be the impetus and motivation for finishing strong.
Pro Tip: Consider future income sources to support you in retirement.
5. Retirement
Stepping into retirement can be challenging as you switch your mindset from saving to distribution. It means that once you get to retirement, your hardest decisions are thinking through questions like:
- Where am I going next?
- How do I spend my money now?
- Who am I giving this money to?
- How am I going to grow my legacy?
These are all critical questions that can require a great deal of thought and may benefit conversation with a trusted financial advisor.
Pro Tip: Maintain a long-term focus and be confident that you've taken the right steps to build your wealth.
Join the conversation today.
Here at CommunityAmerica, we believe that financial peace of mind begins with real conversations about money and saving. That’s why we created a podcast to help you discover more about what steps you can take in your current stage of life.
