Saturday, August 6, 2011

The Four Money Stages Of Life

Been reading a lot of articles by Ms. Karen Galarpe on Financial Management. She is a money management guru and writes regularly for Good Housekeeping magazine. Recently, I read an article titled, "The Four Money Stages of Life" and I just felt interested as this sounds new to me. Well...I have an idea of the money stages in life but I don't exactly know how to refer to each stage.

According to this article by Karen Galarpe, the four money stages of life are: 1.) Start Up Stage which is defined as the stage when your only source of income is your salary or earnings, 2.) The Build Up Stage is the stage when you still have your own day job but about 20% of your total income comes from your savings and investments. 3.) The Asset Allocation Stage which refers to the stage wherein you've stacked up more savings and investments, and these provides for 30 to 60 per cent of your total income and the last of course, is 4.) The Retirement Stage wherein you don't need to work anymore since your savings and investments are enough to live the lifestyle you want.

I guess having this as a guide will help us identify our current position and strive to work harder not to be left behind. After we identify our current position, our goal now is to move on to the next stage and so on. Let's face it...sometimes when we are earning quite big, we tend to be extravagant and spend like there is no tomorrow. We have that feeling that our cash flow will never end. Only on a later stage that we tend to realize that we are already far far left behind. I'm sure most of us are aiming to be in a situation where we never work for money anymore,rather money is already the one working for us. This translates to having good investments.
We all look forward to the time that we are just relaxing and having vacation trips here and there feeling secured of a guaranteed income from our investments. Who wouldn't like that? It's so ideal!

To achieve this, we have to review our current finances, start saving and invest. Hmmm...I think I'm on the second stage (lol). Quite a long way to go but it's not too late.

How about you? Which stage are you in now?

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