Money comes and goes in our life at different times. Mostly goes, when you're young. Those are the spent years. Maybe the misspent years. But never mind. As you grow older, the urge to save creeps up on you. So here's the typical cycle of wealth:
Age 20-3o. You establish credit, buy your first furniture and appliances, take your first auto loan, learn about insurance and taxes. Maybe you save a little money, in the bank or in company retirement accounts. Retirement accounts are money machines for young people because you have so many years to let them grow untaxed. By the end of the decade, you get married, have a baby, buy a house. (You save for a house the old fashioned way - by borrowing some of the down payment from you parents.)
Age 31-45. You don't know where your money goes. Bills, bills, bills. College is a freight train headed your way. Maybe you start a tuition savings account. Money still dribbles into retirement savings, but only if your company does it for you, by taking it out of your paycheck before you get it to spend. When you're pressed, you open a home equity line and borrow money against your house. This is a good time to start a business or get more education. Invest in yourself and hope for a payoff.
Age 46-55. You do know where your money goes: to good old State U. At the same time, you get the creepy feeling that maybe you won't live forever. You thrash around. You buy books about financial planning . You have an affair. When all else fails, you start to save.
Age 56-65. These are the fat years. You're at the top of your earning power, the kids are gone, the dogs are dead. Twenty percent of your salary can be socked away which is lucky because you will need extra money for your children's down payment (kids never really go away). Consider long term care insurance.
Age 66-75. How golden are these years? As rich as your pension, social security, and the income from the money you saved. Start out by living in the firt two. Let the income from savings and investments compound for a while, to build a fund for later life.
Age 76 and up. Quit saving. Spend, spend, spend! Forget leaving money to your kids, they should have put away more for themselves. Dip into principal to live as comfortably as you deserve. This is what all those years of saving were for.
-Jane Bryant Quinn-
Making the Most of your Money