Managing Your Money at Five Stages of Life

Barbara Jones
Checking Credit Card

lifestageFinances effect every household today, an integral aspect to home-ownership. Often times there are associated affects, like worries and stress.

In a study done by the National Foundation for Credit Counselling titled “2013 Financial Literacy Survey”, 77% of those who responded to the survey confirmed having some type of financial worries. In this same study, 57% of Americans expressed worry over savings, and another 47% worried about “rainy day” saving, those savings that are placed in reserve for emergencies. 38% were concerned with having enough money set aside for retirement.

Although saving money is a consideration for most of Americans, 40% of adults graded themselves as C-F on knowledge of their own personal finances, most of whom expressed they knew they could use and benefit from additional financial advice. They expressed a realization that they could use some help in normal, everyday type of questions from a financial professional.

The following are a few financial management tips for different stages of one’s life:


Start with good habits, begin saving now. If the money is from birthdays, allowance, or a job, the key is to start putting money in a savings or some other interest bearing or investment account. Even it it seems like small amount, interest will grow over time.

Learn to budget. Consider various expenses and decide how much will be spend on each, if it’s entertainment, cellphone, or clothes. Make a list, and see where the money goes, no matter how small or large. Knowing exactly how where money is spent can help in actual purchasing situations, understanding the relative importance of each purchase.

Young Adults

According to Pew Research Center, since the 2008 recession, young adults are carrying less debt. They state the primary reason is because they own less major assets. In fact, these are the lowest reported shared household debt since the government began collecting this type of data 30 years ago, only 78%. Shared young adult credit card debt has dropped from 48% in 2007 to 39% in 2010. The only major type of debt to increase was student loans, which in 2010 only accounted for 15% of total debt carried by young adults, a rise from 9% in 2007.

[link in original here]

Savings and Investment. The phase of young adulthood, if married or single, is the least expensive time of life. Jobs are more readily available and they are up and making money, and it is important to know how to use it. Instead of saving money, they can often go out and spend it on cars, entertainment, clothes, and more. It’s good financial advice for young adults to continue to save for the future, and start to plan for retirement. Get the most out of retirement accounts, even if the stock market might be volatile, over time the compounded interest and growth will be on their side.

Pay Down Existing Debt. 40% of young adults under 30 start out with significant student loan debt, an average of $24,301, not including any potential credit card debt. This can be quite overwhelming and stressful, and it is important to have a plan to pay it off. Most often, it is good financial advice to start with paying down the highest interest loan and pay as much over the minimum payment you can. And, if you find yourself with some extra money, put it toward paying down the debt even more. Save on expenses by using coupons or taking your lunch to work, and make mircopayments on existing debt. Two out of every five (37%) of adults, which is about 86 million people in the US have month-to-month credit card debt payment. This percent has declined year by year since 2009. And, the median outstanding credit card balance has declined to $1,700 in 2010 from $2,100 in 2007, as cited by Pew Research Center.

Build Your Credit Score. Yes, test scores in school might be behind them, but not is time to focus on credit scores. Your credit score is considered more important than any other exam because it is the primary means by which a lender assesses you. Credit scores effect terms, interest rates for loans, if it’s credit card, mortgage, or auto. There is an inverse relationship between credit scores and interest rates, the higher the credit score, most often the lower the interest rate, which means more money a person can keep. Also, payment history and how one one spends money or how it is handled is important, as this might be reviewed and considered for apartment rental or insurance applications.


Before the wedding, newlyweds must disclose all of their debt to their perspective husband or wife. This includes student loans, credit cards, car loans, or even personal loans from friends or family. They should share credit reports. Either or both of the newlyweds can enter this new partnership with debt that can eat away and drain money that could otherwise be saved and put toward various financial goals, like retirement.

Decide on joint or individual bank accounts. Perhaps there will be one account for all expenses and income? Or maybe there will be three accounts, one for each person and a “both account”? A joint account is easier to manage and helps with agreeing on how bills are divided, decisions are made jointly. Once children are born, couples tend to lean toward joint accounts. If they choose separate accounts, a plan must be considered as to which accounts will be paid to each bill, keeping in mind the timing of each bill payment.

College fund. There is no time like the present to begin putting money away into a college fund. There are even college savings plans with tax benefits, like state-sponsored 529 plans and educational savings accounts. Friends and family can also make contributions to college funds.


Windfalls and interference. Money will often come in the form of a home sale, insurance payment, or inheritance. It is a good time to pay down, if not completely off, high-interest debt, like credit cards and auto loans. Or, put the money into debt-bearing emergency account, several months income or six months of house payments. Or, put the money into your retirement account.

Teach the kids about money and finance. Set a good example for your kids, as they learn from watching you, if it’s saving money, spending wisely, investing, or giving to charity. Take the kids shopping and show them how to compare prices, find the good deals and know when to walk away from purchasing, when the deals are not such ‘good deals’. Start an account for them, in their name, allowing them to make deposits. Show them the interest they earn on each month’s statement. Provide them with some type of allowance, and give them the freedom to make their own financial decisions with the money. They can chose how the money is either spend or saved. Help them realize that once money is spent, it is gone.

Preparing for Retirement

Maximize retirement savings. Even if they are still helping pay for college, it is equally important for people to save all they can for retirement. When one retires at 65, will the savings help sustain them for at least 20 years? It is smart financial action to put away and save 10-20% of one’s annual income for retirement. Employer retirement or individual retirement plans? Max them out!

Pay off debt. It’s easier to pay debt down or completely off when there is income, while one is still in the workforce. 2 million seniors over the age of 60 have debt, according to the New York Federal Reserve. If you have multiple credit cards, select the card with the highest interest rate and pay as much as possible above the payments minimal monthly requirement. Perhaps instead of eating out, take the money and pay down your credit card.

Make Savings Last. Seniors today are living longer and it is important to have a plan to make those retirement savings last longer. It might be hard, depending on financial market troubles, but development a lane and budget are imperative. If you need help, seek out a financial advisor. The FDIC provides useful information on making retirement money last after your last paycheck.