Are you a mid-career manager? Improve your personal finances with this checklist

Our financial goals change as we pass through different stages in life. This article is targeted at managers in the middle of their career (i.e. those who have been in managerial roles for several years) as a guide to plan your finances for the next decade, up until retirement.

As a mid-career professional, you are probably building your family and lifestyle while enjoying the benefit of a higher income. You also have about a decade or so until your retirement. Now is a great time to check whether you are on track financially in planning for your future.

You may spend a fair amount of time and energy contemplating your next car purchase or next vacation, so why not make time to assess your financial health as this will have a long-term impact on you and your family?

Although planning for retirement may sound like a daunting exercise, you can use this checklist to break down what needs to be done and guide yourself to a happy and comfortable future:

Be honest about your spending habits

Are you taking up more high-interest loans than is wise? Whether it’s a new car or another house, these big-ticket purchases have a huge impact on your finances. Are you truly comfortable with servicing these loans for several years? If yes, wonderful! If not, it is perhaps better to pass on these purchases so that you don’t take on more debt that you already have. The less you owe, the less you stress.

Beware the status game, i.e. making flashy purchases to impress your peers. This is a dangerous game that never arrives at a point of satisfaction, and can potentially bring you close to bankruptcy if done on the regular.

Visualise your retirement

Chart your retirement plans. How would you want to live? This gives you an idea of how much you should set aside to meet your vision, and you can adjust this along the way.

Doing this may involve thinking about the area you want to live in (e.g. you may want to move somewhere with a lower cost of living), gradually setting in place the environment you want to have or reducing obligations to enjoy more freedom.

Don’t underestimate the compound effect

Are you maxing out your pension plans? Dipping into your pension fund today and spending this ‘quick cash’ will reduce the total amount of funds you have available in your golden years. Setting aside even a small amount now on a monthly basis can grow into a surprisingly substantial sum twenty years down the road!

Invest wisely and realistically

Have you been making investments based on your risk appetite and personal expectations on returns in the long-run? Don’t be ashamed if you’re not the boldest investor and do not subscribe to the get-rich-quick schemes by some people out there.

If you are cautious by nature, think of it this way: how much money or assets are you OK with losing? Do not invest beyond that amount, so that you always have a rational idea of the living standards you can maintain and future plans you have under your control.

Embrace financial security by:

  • Understanding the risk vs return on your portfolios.
    • What are the possible risks?  What are the worst case scenarios in each type of risk, and is the level of return justifiable?
  • Adopting rational planning and strategy instead of relying on emotions.
    • Are your decisions rational based on your current situation?  Are you making an emotional investment decision?

Research thoroughly

The more knowledge you have in an investment tool, or on a company that you are investing in, the lesser your risk will be.  Knowledge helps to mitigate risks and enables better decision making.  Some research information to look out for:

  • Management team
  • Review past performance and current performance.  Study the factors that contribute to exceptionally good performance or a sudden drop in performance
  • Read all the financial documents, these include quarterly reports, annual reports, investors presentations
  • Study industry trends
  • Read expert opinions and public reviews

Consult a professional

If all the above feels complex or a handful, or if you lack the time to sit down on your own and figure this out, consult a financial planning professional. S/he can help you see the bigger picture, make well-defined and realistic plans, plus help you stay on track to meet your goals. You might also gain fresh knowledge on personal finance in general, which can equip you to make decisions more easily on your own.

You have worked so hard to establish your career, achieve your current lifestyle and keep your family happy. Now that you have these milestones behind you, get started on planning for a comfortable retirement!