Did you know that age influences your perception of wealth and how you use it? The impact of wealth can also significantly affect how we view things, including future perspectives on money. Understanding how our attitudes toward money changes with age might be the key to good financial planning.
If you were fortunate you were introduced to money in your childhood, most likely as a gift or a birthday check from your grandparents. You might have spent it all on a toy of your choice, or maybe your parents taught you how to start saving. At this age however, our point of view is fairly limited, and we have no future concept of having and saving money.
In your teen years, your spending habits are focused on social activities with friends. The future is still far off, so money issues like saving or buying insurance are the responsibility of your parents. Most purchases are made with credit cards, so cash becomes unimportant. For the most part, these spending habits continue throughout college.
As you transition into early adulthood, money becomes essential to affording necessary items such as apartment rent and groceries. For the first time, you’re earning a salary which affords you some financial freedom. But for some, having a consistent paycheck can lead them into debt.
Your attitude towards money begins to shift dramatically in your late 20s and early 30s. You’re maturing, and possibly embarking on major life changes such as marriage, having your first child, and purchasing your first home. Financial products like loans and money market accounts are suddenly important but saving for your retirement may be challenging.
From Birthday Card Cash to Your First $1 Million
Your career is on track and your earning capacity peaks in your late 30s or early 40s. You may be able to pay off debt faster, and as a homeowner, having low monthly housing costs adds to your financial well-being. You can now turn your attention towards planning for retirement and ensuring your finances and assets are protected for the future. If you have a significant net worth, looking into multi-generational wealth and estate planning is essential.
Many retirees look forward to enjoying life after work, but a significant percentage of people now work past the average retirement age or continue to work part-time once retired. High-net-worth individuals can use accumulated assets, and other financial products, to pay for expenses. At this point, you might also become more charitable with your wealth, and think seriously about creating a legacy trust, if you didn’t have one already.
From the birthday cash you receive as a child, to the way you save as an adult, the trajectory of your financial well-being can be affected by how perception of money changes over time. Fortunately, there are many strategies to help you navigate these changes.
Navigating These Changes
As your life goals change, so does your future perception of wealth. It’s hard to think about accumulating assets or how to set aside income for future medical costs when you’re eighteen. It is not surprising that strong financial skills are more common among older adults than younger ones.
Given their substantial assets, high net worth individuals have added concerns about investment management and tax and estate planning. But they also have a number of financial options that can protect their personal wealth and minimize taxes legally. These might range from comprehensive estate planning to irrevocable life insurance trusts and gifting assets to lower-income family members.
The Jeffrey M. Verdon Law Group has more than 30 years of experience in estate planning and asset protection. We provide solutions for affluent families and business owners with ultra high net worth estate planning and complex tax issues. We will help secure your legacy for future generations.