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Being Financially Prepared for the Next Stages of Life

Using the 5 stages of career development, this article sets out to give you a reference of how you can set your own financial goals in accordance to the different stages of life.
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31 Mar 2023
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Contributed by Credit Bureau Singapore


Rising inflation is among the top concerns of Singaporeans and with the statement of the Singapore Budget 2023 on 14 February 2023, many plans and measures have been introduced and put in place to help enable Singaporeans to tackle the upcoming challenges and to prepare for the years ahead. This is also a good chance for young adults like you to start planning about your future and how you can make good use of some of these relief measures to seamlessly transition through the different phases of life – from a graduate, to a seasoned worker and all the way till retirement.
More importantly as we take up more roles and responsibilities along the way, we will have to learn to anticipate a rise in expenditures in the future and adjust our budget and spending habits throughout the different life stages. 
For instance, as we progressively mature in the workforce and we typically see a growth in our income, this changing life pattern often comes with increasing financial burden as we develop even higher expectations and ambitions for our standard of living.
Using the 5 stages of career development, this article sets out to give you a reference of how you can set your own financial goals in accordance to the different stages. This is also a good time to give yourself some space and thoughts on where you would expect to see yourself in the coming years. 
1. Exploration – early 20’s
This is a ‘try-out’ phase where you are receptive to taking in various advice or references from the people around you. You can consider applying for temporary or intern positions during your school term break to add more colours to your resume and begin your first savings. This option may also give you a clearer picture of your strengths and weaknesses before deciding on the type of role or industry that will suit you best. 
2. Establishment – mid 20’s to 30’s
The second phase begins with the start of your first full-time job followed by a steady stream of monthly income. This is also the best period to start your first savings account to focus on growing a sturdy base of money. During this phase, you may experience many new situations and people who can help you settle into your role faster and develop new skills along the way. However, do not feel disheartened if you experience challenges or setbacks as these are all part of the process to help you advance as an individual. 
3. Mid-career – 30’s to 40’s
The third phase happens when you have progressed from a newbie to a seasoned worker. Typically at this age, you would have experienced some career promotion and a growth in your overall income. If you have plans to start your own family, you will notice a big shift in your needs prioritisation. Most of your savings might be spent on planning your dream wedding, a new home and even a family car. You should be more confident to expand your investments portfolio through low-risk investment products such as Fixed Deposits, Unit Trusts and Bonds. Also, you will be keener to understand further on expanding your insurance coverage to your family members or apply for an endowment plan to protect yourself and your family from uncertainties. With this major increase in responsibilities and commitment, you may be prioritising most of your spending on paying off your mortgage loans, insurance, and investment accounts, thus curbing non-essential spending. 
4. Late-career –40’s to 50’s
The fourth phase is more relaxed as you would have established a firm position in your workplace and built up a steady reputation in the industry. You would be more or less settled down in your current role and you can stay satisfied and feel rewarded. You should already have a steady stream of passive income on top of your full-time job as you reap the fruits of your labour from all your steady investment returns. You would have already paid off most of your loans hence you can have the flexibility to spend more on self-indulgence expenses like travel. However, you should also be prepared to incur additional costs such as more health check-up appointments or funding of your children’s educational fees. 
5. Decline
The last stage is when you have decided that it is the best time for retirement. You might switch to a less demanding part-time job or even participate in full-time volunteer events instead. Bearing in mind on the loss of most of your monthly income, you should be well-prepared as you are still receiving a steady stream of funds from your investments and your endowment plans have matured, leaving you a big pile of funds to cover your personal expenses as well as inflation in the years to come. 


Check your credit report
Here is another word of advice – remember to check your credit report from time to time as maintaining a good credit reputation is important, especially when you have to purchase big ticket items such as a house or paying for your children’s school fees. Credit providers will check on your credit report before extending out a loan to you, so the consequences to having a poor credit report can be dire. Should your loan application be rejected, you would have to seek for alternative means for additional funds which might also mean having to re-plan your finances, possibly delaying your future goals or building your wealth.


All in all, we own our own timeline and our journey is unique to each and every one of us. The definition of happiness and success should be self-determined, and not through comparison with others.


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