The environment around us changes drastically as we move from one phase of life to another – from being a student to a fresh graduate, and eventually a seasoned worker in the industry. Through the different stages, you will also notice changes in your expenditure.
This article gives you a guide to setting your own financial goals according to the five stages of the Employee Life Cycle. This is also a good time to think about where you expect to see yourself in the coming years and what life goals you want to work towards.
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This is the first stage where you are receptive to taking in various advice from the people around you. These people can be your family, lecturers or even your friends. They might influence your ultimate decision on the type of industry to venture into.
You can even try out temporary or intern positions during your school term break to discover some of your own strengths and weaknesses before deciding what kind of role would suit you the most.
This stage can happen even when you are still an undergraduate. Make full use of your school term breaks by applying for part-time jobs, apprenticeships or even scholarship programmes. Not only will you be able to gain valuable work experiences, but you can also take this chance to earn some cash to accumulate your savings before you graduate.
The second stage begins with the search of your first full-commitment job. As you take your first step into the working industry, you may experience many new scenarios and meet new colleagues or mentors who will help you to settle into your role faster and develop new skills along the way.
It is inevitable to experience challenges or setbacks along the way, but these are important in helping you to advance and grow as an individual. During this period, you may also notice an increase in your expenditures such as transport to the office, lunch money or even shopping for more work attire. You will also start showing interest in financial products that will help you to grow your wealth, or even consider getting more insurance plans to prepare for the inevitable.
It is advisable to start your own budget planning so that you can maximize your assets, and control your expenditures so that you can start planning for the future.
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The third stage happens when you have progressed into a seasoned worker with about four to five years of working experience. At this age, you would have experienced some career promotion or growth in your overall income. You have a sturdy base of savings which gives you more assurance to change your lifestyle. During this period, you will notice big shifts in your needs and priorities. Most of your money will be spent on fulfilling your higher ambitions like buying a bigger house, a better car, or travelling.
However, be careful not to let your ambitions overtake you and practice prudence to ensure that you only spend what you can afford. It is important to stick with your budget planning to make sure that you still have a spare stash of cash to fall back into should there be a need to make big-ticket purchases.
At this stage, you might have secured a stable position in the company and built up a steady reputation in the industry. But with age, our health might decline, making it more likely for us to incur unexpected costs during this phase. Unforeseen circumstances like increased health check-ups and growing health issues may indirectly increase your medical expenses and health insurance premium prices.
The last stage is when you have decided it is the best time for retirement. You might switch to a less demanding part-time job or participate in full-time volunteer events. Bearing in mind that you would no longer be getting a steady stream of regular income, you should be well-prepared by factoring in the essential daily expenses and inflation in the years to come.
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Check your credit report
Make checking your credit report a part of your routine in managing your finances. A good credit reputation is important, especially when you need to purchase big-ticket items, such as buying a new house or paying for your children’s school fees. Credit providers will check your credit report before extending a loan to you, and the consequences of having a poor credit report can be dire.
More employers are also checking credit reports for employment screening on new hires or existing employees. A less-than-ideal credit score not only puts your job at risk, but you would also have to seek alternative means for loans. Eventually, you might be faced with a potential delay in pursuing your financial goals.
Ultimately, our life journeys are unique to each one of us. The definition of happiness and success should be self-determined and not through comparison with others.
This article is contributed by Credit Bureau Singapore.