Examine the Typically Ideal Financial and Money Cycle in Our Lives

Where ever you are, there is a certain pattern we all go through or maybe shall I say we wanted to go through ideally.  Most of us started out with nothing and work our butts to make and save money. Knowing these patterns can help us plan ahead and be conscious about the impacts of our decision now to our future finances.

Most of you reading this wanted to make more money.  The primary reason for that are as follows:

• To have an enjoyable and comfortable living
• To raise and educate our kids
• To save and provide for our future
• To provide a lasting legacy to our descendants

Over the course of our lives, we have dealt with lots of financial choices – how to earn, where to spend and how much to save.  Each of these choices are influenced by decisions in certain points in our cycle of wealth which typically follows this path:

1. Ages 11 to 19 - We started to learn more about money and have been influenced, one way or another, by how are elders (say your parents or grandparents) manage their own finances.  This is where we build our values about money and life long habits that may need to be broken later in life if it is not aligned with what your financial plan dictates you to do.  This is the time where you make a lot of trial and errors which often than not determine how you approach financial problems later on in life.  This is the most crucial time to learn financial planning.  If you have kids, this is the best time to teach them about money.
2. Ages 20-29 – This is the time most of us started to work, establish our own credit, buy our own rented home furnishings, spend much on the things we want (not what we need).  Although we are mostly happy-go-lucky guys at this point, this is where we now realized how hard (or simple) it is to make money and also the time we all dream about making it big in the near future.  This is the age group wherein we will normally plan for marriage and most of us will wear a wedding ring by the end of the decade.  This is the time you also get your first mortgage for your home and if you are lucky (means you have savings), you will probably not borrow the downpayment money from your parents.  Otherwise, you know where to run to right?
3. Ages 30 – 45 – Most of us are in financial limbo at this time.  It’s a turbulent financial period. We can no longer track our expenses.  Bills are everywhere.  We buy and subscribe to more things that we don’t really need.  We max out our credit cards and are just paying the minimum.  We are barely making ends meet.  The babies we once love to cuddle are growing now and eating much on your budget.  We now start thinking and saving for the education of the kids.   We think about how to make more money and might end up doing double jobs or your other half might need to work as well too.  We might even start your own business here and be part of the 95% that fails in the first year of operations.   You realize later in this period that you need to plan for your future retirement.  We make ourselves busy with so many things.  We worry too much about our losing our careers or business that we forget about our relationship and family ties.  We also started worry about aging and our health that we now invest in health and life insurance.
4. Ages 46 to 55 - Finally, we now know where the money we spent went and who spent it.  You finally learned financial planning the hard way.  You also buy books in financial planning at this point to reinforce and confirm your actions.  This is also the time that we are more morbid of the fact that we cannot live forever.  You now know that you need to save and invest more for your future.   We started to get more worried about our health and how we can finish the financial work that is finally taking shape.  You might have an affair at this point or a bitter divorce.  Later at this stage, you started to see less and less of your kids and you realize how much money you can save without them.
5. Ages 56 and 65 – You now have more money to spend but are not wanting much so you increase your savings to 20% or more.  This is where you focus more on your grandchildren than your children providing for them as you wanted not as they needed.  You establish a reputation of being paranoid about the finances of your kids and is always concerned about your grandchildren’s future.  You play the hero to your grankids as hated much by your own children.  You eat less and need less so you also started to give donations to charity or to the church.
6. Ages 66 and up – You are at the prime of your life.  You are as rich as your pension can be plus more.  If you have saved and invested money well, you are well poised to enjoy the golden years.  You give more to your church than any other period in your life as you are there often.  You stopped saving and spend as much as you can now to enjoy the fruits of your labor.  You may even dip into your principal just to live comfortably as you can or maybe to finance a failing health recovery program advised by your doctor to you or your partner. Your kids and grandkids are well established so you leave them now to their rightful guardians – their parents.  You die later on happy with what you have in life and what legacy you left for your descendants.

Now that’s ideal wealth cycle assuming we will all live well beyond 60 years and up.  Now, at this point in time in your life you may not be in the same situation as described in the above age groups given the unique circumstances of each of us.  Granting that probably you never get married or you never have kids or you get divorced and started a new family all over again or maybe you are sick or had an accident early on in life, the above age group scenarios will surely not apply to you.  But to many of us, this is the ideal scenario.  We started with nothing and we wanted to end up with everything wanting to leave a little bit more to our offspring.

Now the relevance of this in your particular situation is that you have to realize that this is a very common financial cycle in our lifetime although certain events may happen at different age groups.  This will surely change in the near future given the fast and rapid pace of technological and scientific advances but the underlying factor is the same – we live, we make money, we spend money, we save for our future, we spent what we save, and we die.  We all have to realize that money, if not well managed, can lead you to nowhere, not even to the closest the remotest dreams you want possible.

So knowing that, we can now play scenarios several years ahead of us and start planning for each one.  What will you do when you are middle aged?  Where will you be when you are old?  Will be happy or sad?  Will you be guilty or fulfilled with what you have?

Find out as we travel along these thin band of financial road to success.  Where others dare not to travel, we will dare and unearth its mysteries along the way.  Are you with me?