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Hazel Parry

Change is a fact of life. It is something that happens whether we like it or not. Our bodies change, our lives change and so do our priorities.
The things we desired in our twenties are not necessarily the things we desire when we are twice that age. This is why, says financial adviser Angus Sexton, it is important to make sure the way you save, invest and spend money changes with you. 
'A lot of people start out with good intentions and put a strategy in place but they don't review it,' says Sexton, senior vice-president with financial advice and investment group ipac.
'They never think to change things like their insurance requirements after getting married or having kids. They don't stop to consider that their short-term and long-term goals have changed.' 
Your Money  guides you through the seven major stages of life and the financial planning goals that come with each.
 The child
 Good money habits learned in childhood can last a lifetime. 'Research shows that children's money behaviour is usually established by the age of 10,' says Sexton. 
This is why parents should teach financial skills, he says,  with one of the most important lessons being the value of money. 'It's important that parents involve their children in money, educate them and try to teach the value of money and encourage a saving mindset.'
Awarding pocket money is a good way to introduce children to money and budgeting as it gives them an element of control. Likewise, paying pocket money in return for chores shows money has to be earned, while piggy banks or junior bank accounts create a saving mindset.
 The student
 Arguably the most enjoyable days of a person's life, and possibly the most financially frustrating, with so much to do but so little cash to do it with. As a consequence, one of the biggest traps for students is getting into debt.
Budget is the important word during this stage, says Sexton. 'This is the time when you really need to have a budget. Nobody expects university to be about having a tight budget but the last thing you want to do is spend years qualifying for a profession and then enter the workforce thousands of dollars in debt.' This is a time when parents must  avoid turning into a cash machine open all hours. 
A lot of parents don't want to lumber their children with money worries when they are studying, but that kindness won't help them later in life. If students don't know the value of money, they are just going to take that attitude with them in life.
The first jobber
 With the first pay packet in your hands, now is the time to sit down and work out your goals in life and plan a financial strategy that will allow you to reach those goals, says Sexton.
'A short-term goal may be buying your own car or saving for a long summer holiday. Here you're looking at a savings vehicle for the short term. You're talking about cash and fixed-interest investments with little or no risks,' he says.  
Medium-term goals, such as buying a property before the age of 35, give you a longer time frame, which allows you to introduce investment components with a little more risk, such as equities, longer-term bonds. For the first jobber, long-term goals could be marriage, parenthood and even retirement.
It's only the very few who are organised enough to be thinking about retirement at this stage. But if you're 25, you can afford to be really aggressive with equities and property in your retirement fund, knowing things like the global financial crisis are a minor setback on a long, long road of investment.
Insuring your income against short-term injury or disability is also advisable, as is budgeting, having three months' salary in accessible cash for emergencies, and setting money aside every month for your tax bills. 'That way, when the tax bill comes, it is not a strain and you don't have to take out a tax loan or use your bonus, and your bonus - part of it, at least - can be used as a trampoline to accelerate your savings.'
The couple
 This is the stage when two salaries become one - and in doing so create fresh challenges and different priorities. Again, it is crucial to re-examine your budget, look at your joint financial power and reassess your goals.
For many young couples, clearing debts or a mortgage is a priority medium-term goal, says Sexton, while  short-term goals may be paying for a wedding or even starting a family. Neither of which come cheap.
'Openness and honesty is crucial at this stage,' says Sexton. 'You need to work out what money you are going to need for these goals and gear your investment around that and again review your strategy.' 
Making a will becomes important now that there is another person in the equation, as does insurance. Likewise, as you edge closer to retirement, you need to look at your  pension fund, assess  its performance and consider extra voluntary contributions. 'Your focus is medium-term but you should always have one eye on the long term  so you don't have to rush things at the end.'
The parent
 The most expensive time of your life as the patter of tiny feet  brings extra expenses.  It spans at least 18 years and  runs into millions of dollars. 
'This stage is less about saving and more about coping with increased costs and expenses. Most likely you are going to have dropped one income, so there'll be more strain on the family income,' says Sexton.
This is when forward planning in the earlier stage reaps rewards and money put into a portfolio for a future family can be put to use.
As you come to the time you want to access those funds, you need to make that portfolio safer by introducing more fixed-interest investments and cash. The thing that remains a constant throughout all these stages is the retirement fund. Insurance is now more important and it may be a good time to have a professional review your insurance requirements.
'Death cover is very important. You also still need to insure that income, covering for short-term illness or temporary disablement, because the income is the main driver of the financial situation.'
Again the dreaded B (budget) word comes in here. You need to make sure you are sticking to your budget. You also need to review your will. If you have children, you need to think about guardianship. You need to think about disposal of your assets in the event of your death and a trust enacted through a will is a good plan.
The empty-nester
 This sixth age brings freedom from the expense of parenthood but with retirement looming, it is no time to sit back. Sexton sees it as a chance to accelerate retirement savings. 'You may have surplus income because your expenses have dropped. Now is the time to invest as much as you can into your retirement objectives. 
'Be it 10, five or three years away, if you can enhance that retirement fund, it can be cream on top, which is going to make you more comfortable in retirement.'
At this stage, says Sexton, people may be more cautious because they think they only have five years until they retire. However, in reality they are looking at an investment time frame of as much as 30, even 40 years, until they are 85 or even 90 years old.
'This means you can afford to be more aggressive and take on a fair degree of risk with a large amount in a well-diversified equity portfolio and some property.'
By way of contrast, having paid off debts, the mortgage and no longer having dependent children mean the empty nester needs less insurance cover, which may free more cash to invest. This is also the time to review your will, paying particular attention to dividing your estate.
The retiree
 In Shakespeare's Seven Ages of Man, the seventh age was one 'sans everything'. But if you've planned your retirement, it should be one with everything you want. The difference, says Sexton, is that as a retiree you become a spender rather than an accumulator and you need to adjust your portfolio accordingly, making your assets less capital-growth-orientated and more income-orientated.
Sexton advises having a safety net of around two years' worth of income in liquid assets. 
That way if a global economic crisis hits and your portfolio starts to underperform, you can go on for a couple of years without having to touch your portfolio.
Regularly reviewing your portfolio should remain a priority as your needs and spending patterns change with age. Basically, you are looking for  a diversified portfolio with ease of management and geared towards providing your income but still having growth because you need to keep pace with inflation. 
'There are all sorts of products on the market for people in retirement. This may be the time to seek the advice of professional advisers if you haven't done so earlier.'
But what about the 'B' word? Is retirement an age 'sans budget'. 
'No,' says Sexton. 'It's a strategy that never ceases. It is with you for your whole life.'



Seven ages of man and money