Is your financial situation in line with your age?- Excerpts of the book "Finance for dad"

Is your financial situation in line with your age?

Below you will find the profile of a typical self-privileged man. Make a comparison and draw your own conclusions.

FIRST STAGE: FROM CHILDHOOD TO YOUTH

Until the age of 18 – The stage of basic education

At the age of 18, the self-privileged man probably still lives with his parents. His fundamental needs are covered by them. As part of his financial education,

he seeks a job where it is possible to work during his free time.

SECOND STAGE: FROM YOUTH TO ADULTHOOD

From age 19 to 30 – Professional Education

At the age of 30 he will still be single or recently married. In the first case it is possible that he still lives with his parents. During part of this period they will have covered his fundamental needs, but being conscious that they are also trying to build their own retirement fund, he tries not to be dependent. During the first years of this period, he has replaced his monthly allowance with his own income by working part-time. Later, as his own income increases (which should be rapidly growing) he begins to contribute accordingly to the expenses at home. His financial education is in line with his professional education. Of course, he regularly prepares his personal balance, monthly income/expense, and manages his money based on a budget.

THIRD STAGE: FROM ADULTHOOD TO MIDDLE-AGE

From age 31 to 45 – Raising a family

Basic financial situation. This stage is also known as the family formation stage or the big responsibilities stage. Even if he is single, our self-privileged man is totally independent. He knows that his and his family’s future is going to depend, to a large extent, on what he achieves during this period. This is the stage where income grows at a faster pace, as well as expenses. He knows how to manage his finances in order to comfortably cover his monthly budget. In spite of the high expenses that he has to be responsible for, his income/expense relation is always favorable. If his partner also has an income, they are saving that part to enlarge their investment fund or for some special vacation, like that cruise

around the Caribbean they have dreamed of.

FOURTH STAGE: FROM MIDDLE-AGE TO PRE-RETIREMENT

From age 46 to 55 – The stage of maximum

financial development

This is the stage in which selfprivileged people usually arrive at the top, both in their professional careers as well as in the development of their families. The self-privileged person has a successful business or a good position in his company. His children are already in transition between the first and the second stages, and he is enjoying the satisfaction of seeing them grow and do well. During this period his income has been growing slowly but consistently until reaching its peak, and it will probably start to decline towards the end of it. Even so, now he has fewer expenses related to his children; therefore, the relation income/expense maintains a positive outcome. Now he will be able to go on that cruise around the Greek islands, as he makes use of his partner’s income appropriately. An efficient administration of his finance is now a habit.

FIFTH STAGE: FROM PRE-RETIREMENT TO RETIREMENT

From age 56 to retirement – The stage of renovation

Time goes by so fast! The moment of retirement approaches. It is not pleasant to get old, but for the self-privileged person it is less painful. He is prepared. He knows that his income will decrease gradually, but that the relation income/expense will remain positive. The efficient management of his finances will allow him to continue taking care of his economic resources while enjoying them.

SIXTH STAGE: RETIREMENT

Since retirement until God’s will – The stage for

enjoyable projects

The self-privileged person undertook adequate financial planning; he emulated Aesop´s fabled ant and gathered up provisions for the winter. And winter has now arrived; he has been waiting joyfully knowing that he is prepared. His options are manifold; he can sit back and enjoy the rain falling through the window from the comfort of his warm home; he can sit in his favorite chair facing the fireplace and savoring a tasty French cognac in the company of his partner; he can escape from the cold months and travel to a tropical island to enjoy the sea and the beach or… even better… a cruise in Hawaii... There is no hurry, he can think about it while enjoying his drink, maybe the tropical island first and then the cruise. Why not? He surely deserves it. He has worked hard and has wisely prepared for his retirement.