The years between 35 and 55 are possibly the most financially challenging of your life. This is the time when most people are raising a family, moving up in their career and trying to start saving in earnest for retirement. The demands on both your time and money can pull you in several directions at once – and make you feel like you are making no forward progress.
Everybody knows that building up a pension is important, but it rarely feels urgent. There is no shortage of reminders. In fact, pensions must be one of the most heavily promoted financial products out there. But other competing priorities with tighter deadlines always seem to crowd out longer term concerns. When faced with the choice of increasing pension contributions versus, say, building an extension on your house to create more living space for your family, most people will opt for home improvements.
The incremental spending choices you make every day are similar and perhaps more relatable. Whether you buy a €2.50 coffee on the way to the office every morning or keep revolving your credit card balance month-to-month, incurring interest charges along the way. You know these are not strictly rational choices – it would make more financial sense to use that money more efficiently – but they are relatively harmless and easy to dial down if necessary.
That’s the small stuff. The big stuff – like school fees or replacing your car - might not be subject to the same application of a little fiscal discipline. There is always something else that you just ‘have to’ pay for. The truth is, what you actually spend your money on reveals your preferences, despite what your stated intentions are.
The lesson here is that some things you decide for yourself, but others will be decided for you. Nobody’s life travels a smooth curve where expenses tail off evenly over time allowing you to save comfortably and without effort. But the future is coming anyway.