Phases of financial wellness

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By Real People at 18 Jun 2018, 09:02 AM


Earlier in the year we gave you steps to create a SMART financial plan. In order for you to get what you want out of your financial plan, you need to know what phase of financial wellness you are in. Knowing what stage of life, you are going through, is imperative in setting financial goals, and getting the most out of your financial plan.

Phase 1: Formative Stage

This stage is characterized by you being dependent on an adult for all your financial care, such as education, pocket money etc.

In this stage, your planning is mostly centered around money management and money sense.

Phase 2: Starting Out Stage

In this stage, you are no longer entirely dependent on an adult for your financial needs. You are more independent and are starting your journey into full-time employment and receiving an income.  

Your main focus is to protect your ability to earn an income, saving for future purchases (such as a car, an apartment, insurances etc), and budgeting.

Phase 3: Accumulation Stage

Here you have achieved a comfortable lifestyle and are thinking about managing a long-term future and defining your career path. You have bought a house, car, possibly have a spouse and children.

Your financial focus is primarily

  • protection of your lifestyle
  • health and life insurances
  • investments
  • tax management
  • planning for your children’s education
  • estate planning
  • retirement planning
Phase 4: Pre-Retirement Stage

In this stage of your life, you have the ability to sustain wealth creation due to fewer family costs as your children have become, or are very close to becoming, financially independent. Generally, you may be in a higher salary bracket and most often than not you would have paid off most of your debt.

Your financial focus in this stage is primarily

  • protection of your assets
  • debt elimination
  • family healthcare
  • retirement planning
  • establishing your wills and trusts
  • thinking about your business exit strategy
Phase 5: Retirement Stage

This is the life stage we spend our lives working toward. You are now in a position with more time and money. You have more time to travel, time to indulge in your hobbies, time to enjoy your family and time to prepare for transferring your wealth.

Since you are not working, you are still earning an income through your Retirement Fund that you would’ve built through your career. Your financial goals, then, would include:

  • protection of your assets
  • healthcare
  • aged care planning
  • estate planning
  • gifting to family
  • preserving your capital


What stage are you in? Share your story on financial planning with us on Facebook!


Source: Foundation Financial Services