Shakespeare’s famous dialogue, ‘All the world’s a stage’, details the seven stages in a man’s life. Man starts out as a mewling baby. By the end of his life, he is an old man with no teeth, eyes, or taste.

But Shakespeare makes no mention of finances during these stages. To lead a comfortable life, a person must have enough money in all the stages of life. You do, too. But don’t worry. Why fear when we are here.

Here is how you can plan your finances in the right way:

Early Career:

Getting your first pay-check is a great feeling. It means you are now within reach of financial independence. Your expenses may be high, though. In some cases, they can exceed your income. This is because you are starting a new life on your own. From food items to furniture, you have to buy everything with your own money. If you live in the city, you might want to buy a bike or car. If you have taken an education loan, you will have to pay the EMIs month after month. Besides, you still have to build savings for the future. So, how do you work it all out?

First, set up an emergency fund. This should hold about three to six months of your income. The fund will act as insurance in case you lose your job or suffer from an unexpected illness.

The other important thing is to start saving for your retirement. Yes, you need to think of your retirement from Day 1 of your career. The power of compounding helps. It ensures that your initial savings offer greater returns in later years. Start by investing as little as Rs.500 per month in your retirement account. This will help you build a big lump sum later on.

Family and Career Building:

Most people focus on building their family and career between the ages of 30 and 45 years. The major goals during this period are to improve earnings and upgrade career skills. Many people shift to a larger and more comfortable home at this stage. They may also build a college fund for the children. If you wish to meet these goals, you need a sound financial plan.

First, increase the contribution towards your retirement account. This is manageable since your earnings may have increased. Next, create a specific action plan to meet your different goals. There are many investment options that can help you achieve your dreams. Given the inflation rates, the cost of a good college education will rise. By the year 2030, studying at a regular college could cost around Rs.25–50 lakh. It is necessary to start investing right away. That will help you provide a good education for your children. Systematic investment plans (SIPs) in mutual funds are a good way to achieve this goal. Say you make a monthly investment of Rs.5,000 in an SIP at a rate of 12%. This can earn Rs.25 lakh at the end of 15 years. So, chalk out an action plan for your different goals. Plan them so that they give you the funds at the right time in your life.

Make similar plans for any other goals you may have in life like buying a house, grand vacation plans, starting your own company, etc.

Pre-Retirement:

Your expenses go down by the time you reach your mid-fifties. The children are likely to have grown up and moved out of the house. You would have paid for their college education and marriage. In other words, you now have a great opportunity to increase your savings. But this is also the time to revisit your financial strategy.

Have you been investing heavily in stocks and mutual funds? Then it might be better to shift to safer avenues. You would not want to suffer huge losses in the market just before you retire. Unlike in your early years, you will not have the time to recover your losses. You can shift a part of your funds from equities to fixed deposits. FDs currently provide around 8% interest on average. This may be lower than the 10–15% offered by equities. But FDs offer fixed returns and low risk. In the latter part of your life, your ability to take risk tends to fall.  So, reconsider your investment plan.

Retirement:

You have now given your retirement speech and shed some tears at the farewell party. Now is the time to sit back, relax, and enjoy the fruit of your hard work. You might want to take up a new hobby or travel the world.

But make sure that your retirement savings support your activities. You would not want to deplete all your savings.

There is much you can do to supplement your savings at this stage. Opt for some part-time work in the area of your specialisation.

For example, if you are a financial analyst, you could work as a financial consultant. Also, make sure to reallocate your investments to risk-free avenues. These can also help you earn a regular income.

Do not forget to finalise your estate plan and will.

Every stage in life is new and exciting. But it is important to have financial security. It helps you to enjoy life to the fullest. The above points might help you to plan your finances. Then you can have a smooth ride through all the stages of life.

However, while doing so, don’t fall prey to these myths and mistakes.

You can now start investing as little as Rs.25,000 in Fixed Deposits with Bajaj Finance and earn higher-than-industry-average returns.

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