Money at different life stages
The financial needs and products that come with each stage of life.
Your money needs change as your life does. What matters at eighteen, studying and a first job, is different from what matters at forty, a home and a family, or at seventy, living off a pension. Each stage brings different needs and suits different products, and the choices you make early shape the ones open to you later.
Money changes as life changes
Nobody needs the same things from their money at every age. Financial needs shift as you move through life, and it helps to see the whole map: education, setting up a home, working life, and retirement.
Each stage brings different costs and suits different financial products. Spotting what a stage needs, and what tends to help, is the point of thinking ahead.
Education and setting up home
In education, whether that is sixth form, college, an apprenticeship or university, the costs are things like accommodation, course fees and living costs, often supported by a student loan and a student account.
Setting up a home brings new needs: paying rent or saving a deposit, then perhaps buying. Family circumstances can change too, planned or unplanned. This is the stage where a current account, savings, a mortgage and insurance start to matter.
Working life and retirement
Working life is about earning, coping with the unexpected, and planning ahead. Changes here can be planned, like reducing hours, taking a gap year or becoming self-employed, or unplanned, like being made redundant. Emergency savings, a workplace pension and insurance all earn their keep at this stage.
Retirement means replacing the income you used to earn from work. Some people retire at State Pension age, some earlier. The State Pension, a workplace or private pension, and savings are what people live on.
| Life stage | Likely financial need | Products that can help |
|---|---|---|
| Education | Accommodation, fees, living costs | Student loan, student account, savings |
| Setting up home | Rent or a deposit, then a purchase | Current account, savings, mortgage, insurance |
| Working life | Income, unexpected changes, planning ahead | Emergency savings, workplace pension, insurance |
| Retirement | Replacing income from work | State Pension, workplace or private pension, savings |
Early choices, later results
The stages join up. Building an emergency fund and paying into a pension while you are working shapes how comfortable retirement is. Good habits early make later stages easier, which is why it is worth thinking a step ahead, not just about right now.
- 'Redundancy is a planned change.' It usually is not planned by the worker; it happens when a job is no longer needed. Planned changes are things like reducing hours or taking a gap year.
- 'Pensions are only a worry for older people.' The earlier you start a pension, the more time it has to grow, so the working-life stage is exactly when it matters most.
- 'You need the same products all your life.' The useful products change with the stage: a student account early on, a mortgage in the middle, pensions and savings for retirement.
Key terms
- Apprenticeship
- Paid training that combines work and study.
- Redundancy
- Losing a job because it is no longer needed.
- State Pension age
- The age at which you can start claiming the State Pension.
Not examined
Check your understanding
- Give one financial need and one useful product for the education stage.
- Name one planned and one unplanned change during working life.
- What do people mainly live on in retirement?
Show suggested answers
- Need: accommodation, fees or living costs. Product: a student loan, a student account or savings.
- Planned: reducing hours, a gap year or self-employment. Unplanned: being made redundant.
- The State Pension, a workplace or private pension, and savings.