Many people live beyond their means and survive from paycheck to paycheck. This fuels stress; for example, fears of what would happen if they lose their job or experience large unexpected expenses. People who want to live long would be wise to live within their means, invest in themselves, and anticipate the unexpected, including the need for periodic educational pursuits for career changes.
The basic tenants of the plan are:
live below your means
invest in yourself
anticipate there will be periodic unexpected expenses
save for periodic educational pursuits and career changes as the pace of technological and career changes will continue to accelerate
A longevity budget
I would suggest the following financial formula:
10% charity
10% ongoing education (courses, books, audios, conferences, etc.)
5% fitness and proactive health measures
10% "sinking fund" for periods when you do not work due to health, taking a sabbatical, retraining, unemployment, or pursuing avocations
15% retirement/savings (taking advantage of tax deferred programs such as IRA, Roth IRA, and 401-K)
50% living expenses, paying as you go with possible exceptions for a home mortgage educational expenses, and/or financing a business
People who know their careers are secure and have no interest in changing careers might not need to set aside as much in funds for retraining.
If you need to change careers, it is time to consider what you really want to do. You might be able to capitalize on previous experience so you don't have to start at the bottom of that career ladder. If further education is needed to acquire new skills or credentials, having savings makes it possible. People who think of their careers as lasting forty years often feel pressure to be constantly advancing their careers. If, however, you believe that you will probably be doing some kind of work for a hundred years, the pace is different. Instead you can believe:
I will probably want to have several different careers. This will make life interesting and allow me to live what would have been several lives for others.
I have enough time and financial resources that I can afford to start over with careers and start at the bottom if I think another career path is sufficiently more rewarding.
I'm more interested in personal fulfillment, contributing, and enjoying my career or job than setting new sales records.
By: Michael Brickey, Ph.D.
excerpted and updated from Defy Aging
