Planning for Your Financial Life Stages

Having a sound overall financial strategy requires you to recognize that your finances are in a constant state of change. Not only do financial markets fluctuate, but your financial needs also change over time. It can be hard to predict the direction of Wall Street and other financial markets. Fortunately, it is easier to predict changes in your own financial life.

Most individuals pass through three primary financial life stages as they age. Income levels, spending patterns, family situations and areas of financial concern, while not exactly predictable, tend to follow a pattern.

Life StageLife EventsFinancial Events
Life Stage
Stage One
Life Events

Enter workforce



Financial Events

Develop financial habits

Purchase car

Purchase home

Life Stage
Stage Two
Life Events

Family grows

Career advancement


Financial Events

More home purchases

Accumulation of wealth

Funding college educations

Life Stage
Stage Three
Life Events

Major promotion



Death of spouse

Financial Events

Greater tax sensitivity

Preserving wealth

Estate planning

Stage One—Building a Financial Foundation

Young adults face the task of learning how to manage spending and saving within the constraints of their income levels. Developing sound financial habits is critical.

  1. Learn how you are spending your money to identify ways to save. Prepare a household budget.
  2. Use a wise borrowing strategy. Borrow for things that provide long-term value. Control the use of credit cards.
  3. Establish a saving pattern. Consider using direct deposit for your paycheck and setting up a recurring automatic transfer so that some amount is deposited into a savings account on a regular basis.
  4. Set some savings goals. Whether it is accumulating a down payment for a home, paying for a car or saving for a vacation, connecting a tangible goal with your saving can provide the motivation and discipline you need to save.
  5. Make sure you have adequate insurance.
  6. Take advantage of employee benefit plans at work.

Stage Two—During Your Prime Earning Years

This is often a time when your income is rising as well as expenses. Nicer homes, nicer cars and raising children can easily consume your increasing income. This is also the time when the financial decisions you make have the greatest impact on the financial lifestyle you enjoy during retirement. By now, you should have accumulated some savings and developed the expertise to make sound choices.

  1. Plan ahead for your children’s college expenses. Consider Section 529 Plans or Coverdell Education Savings Accounts (Education IRAs)—both of which offer significant tax advantages.
  2. Take full advantage of employer offered retirement plans. If you have a 401(k) plan available, contribute as much as you can or at least enough to get the full matching contribution from your employer.
  3. Invest wisely. Consider an asset allocation strategy that matches your time horizon (age) and risk tolerance. Don’t ignore the potential long-term returns of equities. But do your homework, or rely on a qualified advisor. A BB&T Branch Banker can connect you to an advisor who can help you achieve your goals.
  4. Be sure your insurance protection has kept pace with your needs. Having adequate life insurance to protect your family, in case of your untimely death, is critical.
  5. Prepare an estate plan to minimize taxes and to ensure that your custodial, financial and medical wishes are carried out.

Stage Three—Nearing or During Retirement

These years can be some of the most enjoyable and fulfilling times of your life. If children and grandchildren are part of your life, having the financial ability to help them can be rewarding. A successful career, the freedom to live the retirement lifestyle of choice and a sense of satisfaction with what you have accomplished can make your golden years truly enjoyable. However, there are still financial issues that should be addressed.

  1. Be sure your medical insurance is adequate. We are all living longer, and the costs of medical care continue to rise. Health savings accounts (HSAs), Medicare, Medicaid and private health insurance will all be important.
  2. Be sure your estate plan is up to date. Changes in your financial situation, moving to a different house or state and changes in your family should all be triggers for reviewing your estate plan with a qualified estate-planning attorney.
  3. Continue to manage your investments carefully. If you are using an advisor or stockbroker, be sure to fully understand their recommendations before accepting them.
  4. Enjoy.

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