Financial Goals & Money Milestones for Different Ages

Last Updated – Nov 17, 2022 @ 6:04 pm

Many believed that financial planning is static all throughout life. Every stage has a unique set of economic strategies to help maximize their finances and best allocate investments with all the risks factored in. 

In a recent survey we did among Filipinos, here is a glimpse of those findings. Roughly 75.8% of the people surveyed don’t have an emergency fund of more than PHP 50,000 (think 3 months’ worth of income with an average of PHP 30,000 per month).

Where emergency funds are concerned, more than half of the responders also claimed they don’t have a cash emergency fund saved in a bank. Only 31.3 percent of them admitted to investing through the stock market, real estate, mutual funds, and other local financial instruments. A staggering 54.3 percent of the respondents responded to have only one or have yet to open a bank account. 

With all the data presented, questions like ‘Should I already have a retirement fund by 40′ or ‘Do I need to start getting life insurance when I’m still in my 20’s’ might come up.

Here’s a quick guide to help you start saving (and investing) the right way consistently to battle overwhelm. 

Before we get started…

Consider this as a benchmark you can look into as you progress in your financial planning.

Just like an annual medical check-up, you will be asked for chest X-Ray, blood tests, urine, and stool sample as basics. In each milestone, these financial activities can help you retire comfortably. 

To take your financial planning to the next level, you will need to accomplish a set of requirements similar to an annual check-up. These include chest X-rays, blood tests and stool samples as basics.

Treat these as benchmarks to help ensure your retirement success.

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Your early 20s to 25 

Your early 20s is the right time to build healthy financial habits. Time is on your side, so use this opportunity!

• Save as much money as possible each month to build enough savings for emergencies or large purchases.
• Set up automatic deposits so this is done without having to think about it. For example, you can set aside from 5 to 10% of your gross monthly salary. If you can, increase the amount as you can ‘tolerate’. 
• Get educated about investing and which instruments will help give you better compound interest over time. 
• If you have debts, it is best to work on a plan for repaying your debt before investing in the early ’20s. 
• You can diversify your savings into goals. You can allocate a specific percentage of your salary for other expenses such as travel, books, gifts, or even attending events and seminars for networking or personal growth. 

Set yourself up now with good saving practices because later down the line, they’ll come back tenfold! 

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From the 30s to 40s 

Adulting is probably the only thing on your mind at this age. Entering your thirties, you may have already found a job with good (and stable) pay.

It’s also a time where you may have incurred loans along the way for big purchases as you enter marriage, starting a family, or have plans to move to a new home.

Here are some of the winning strategies you can implement to help you become more financially stable.

• Creating and sticking to a budget might be easier said than done, but it’s well worth the effort. If you don’t make and follow a budget at this stage, it can be way more challenging to unlearn financially irresponsible behaviour later in life. Budgeting means that you are putting your money to work for yourself. Not only will this give you confidence about paying bills on time, but it also gives peace of mind knowing there is some money set aside if something terrible happens unexpectedly (i.e., an emergency). The most effective way to do this is to save FIRST. Prioritize saving each month, even just PHP 500, so you always have funds ready by creating an “emergency fund.”
• When you turn 30, it’s time to get your own health insurance if you’ve been covered by your parents. If money is tight on the budget at this point in life, ask for an affordable plan from an agent and research other options. It can be easy to look up policies online that would fit within financial capacity, but further digging might allow access to more opportunities than was initially thought possible. 
• If you want to buy a home, aim for saving 10-20% of your down payment. While it is possible with less money saved up, having more than that puts you in a position to build equity and avoid mortgage redemption insurance (MRI).
• Are you trying to get a PhD or a Master’s degree? You should set aside some of your income for tuition, so it doesn’t eat away at your savings.
• If you have a family, plan an educational fund for your kids. To fund college, start thinking about it before your children are seniors and looking at schools. Have a plan to be realistic about what you can afford regarding funding when they get there.
• Having twice your annual income saved in retirement accounts is a great goal. Most people only have half of their annual income when they retire, so having enough money will help you feel more secure when you get to this point in your life. This number varies depending on how much someone makes annually and where that person lives; however, most experts recommend putting aside about 50% or even less until closer to the anticipated retirement age. 

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On your 50’s 

Now that you are almost in your fifth decade, now is the time to make sure you’re financially secure for life.

Use this period to reach all of these milestones before heading into retirement!

• Schedule annual visits with a financial planner to work on your short-term, medium-term, and long-term goals. If you haven’t been meeting regularly, now is the time! Your 50’s are when it starts getting serious about meeting your savings goals to help you ease into retirement as comfortably as possible. 
• By this time, you may have accumulated assets and investments. It’s essential for you and your family that they are secured and well-taken care of after your death. An executor or guardian might be needed for minor kids (depending on the situation). 
• By age 50, you should have around 4 times your annual income saved for retirement. This is also an excellent time to up your alternative investments, such as real estate businesses or trusts (REITs).

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By Age 60

You are inching closer to retirement by this age. By now, you should be making final preparations for this next chapter in your life.

Here are some of the lessons to master and milestones to hit before you reach 60. 

• To maximize your retirement income, pay off any outstanding debt. The money you would spend on interest and payments can be better spent enjoying yourself in the golden years of life. 
• You should be making serious gains in your retirement account with the interest compounding for 20-30 years.
• Look for ways to reduce risk in your investment portfolio. When you are closer to retirement, start looking into income mutual funds, bonds and real estate as safer investments that will help protect the wealth you’ve worked so hard over a lifetime of work.
• As retirement is fast approaching, it’s time to sit down again with a financial planner and ask what steps you need to take to achieve your retirement goals. If downsizing is on the table as an option for where or how you’d like to live out life after work, set yourself up by establishing a timeline that gives yourself enough room/time frame, so everything falls into place accordingly.
• By age 60, you should revisit your life insurance policy to ensure it reflects your current situation and wishes. If desired, make any necessary changes before printing out a new copy for storage in the filing cabinet of all wills just in case one gets destroyed or misplaced by accident during an office move.

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Build your retirement plan 

It’s easy to be discouraged when you think about reaching these milestones, but don’t let it get the best of you.

Have a plan and make intentional financial choices so that you can set yourself up for success!

The goal is not only to have a plan but also to be aware of each milestone to position oneself towards them.