How old are you financially? A baby? A toddler? A child? A teenager? A young adult? Mature? A senior citizen? It’s not about how old you actually are, but rather how you act that determines your financial age. Here are how I see the different financial ages.
A financial baby has no knowledge of his finances, nor of any personal finance principles. A baby relies on others for everything: bill paying, checking, savings (if he has any that is) and any interaction with the outside world.
A toddler is characterized by her interest in the world… and her full scale temper tantrums when she doesn’t get her way. So a financial toddler is interested in learning about her finances, but wants to do it her way. Right now. She’ll pay full price for something shiny and pretty, but lose interest in it a few hours later.
One thing I notice about children is that they have quite grasped the concept of delayed gratification, even though they’re learning about it. A financial child will want to buy something now, but might be able to put it off for a day or two. During that time however, all he’ll talk about is what he’s going to buy, and all he’ll do is rub his shiny new pennies together.
Teenagers are on the cusp of independence but haven’t quite gotten there yet, much like toddlers but only bigger. Prone to mistakes and stubbornness, they’re very into doing things their way, but aren’t interested in hearing any words of wisdom from their elders. This means reinventing the wheel with each financial transaction and living through mistakes that might not have been necessary had they listened to the advice of others.
A young adult is learning her way around things. First job, starting out financially, beginning to contribute to retirement accounts. Might also have a first credit card, car loan and the all important student loans as well. Lots of expenses are part of the ‘latte factor’, disposable purchases that still eat up an important chunk of the budget.
A mature adult has her ducks in a row. Sensible spending patterns? Check. Saving for the future? Check. Earns more than she spends? Check. Check. Check.
Finally, a senior citizen is more conservative in his approach. He spends his time looking for a bargain, possibly even more for the thrill of the hunt than out of necessity. He doesn’t necessarily feel the need to have the latest and greatest model that is released, on the other hand, if he has expensive hobbies, he’s well able to afford them.
I’m 19 financially. And you?