Your potential to earn rises and then falls as you age, so make sure you save whatever stage of life you are at.
Have you passed your earning peak?
Most wages flatline earlier than we think, something which is terrifying because so many of us assume we will make more money when we are older, later, some time soon.
An accompanying thought is that we will save, invest, grow our money – yes, when we are older, later, some time soon.
I hate to be the one to break this to you, but salaries, like life, work in an arc. And when it comes to the other side of that high, the more mature side, the downward spiral is compounded.
Because, just as we start realising that our best earning days are behind us, and reach for the financial belt to tighten, stash more away and pray we stay healthy, statistically, this is when we save the least amount of money.
The risks during the pre-retirement decade include our health taking a beating, losing our job and the struggle to find another, or, if we are lucky and do land another one, earning 20 per cent less than we used to. Even if nothing untoward happens, we simply earn less.
Nowadays it’s thought that our biggest pay happens at 34. Then it is downhill.
It wasn’t always like this. Once upon a time, wages followed this trajectory: first there were the terrifying twenties, a time to acquire experience and hone skills. Unfortunately, the twenties are also tempestuous and full of temptation – creating two opposing forces of earning our least and spending a lot.
But all would be fine, because then came: the thrusting thirties, when we have energy, experience and expertise on our side. Wages increase, especially if there is a further degree. Whatever money trouble we got into the decade before, we can now extract ourselves from.
Next we hit the fabulous forties, when everything converges to provide our biggest pay cheques. "Phew" we think as we plan to save, invest, grow our money some time soon. Because, well, this earning spree just keeps getting better.
But it doesn’t.
Convention, and stats, tell us that women peak earlier than men, and on less. Late thirties, 39 to be precise, earning US$60,000.
Men keep going, and making more - peaking at 48 at $95,000. This according to figures from the United States. Except, I think this is way out of date.
I'd say these figures are a decade out (if you average the conventional male and female ages above: 39+48/2). It makes sense that median earn happens in our mid 30s.
Reasons include women staying in the workforce longer, children being had later. Add to this that many workers have faced wage stagnation since the credit-crunch induced recession. Gosh, we’ve been through a lot of financial turmoil. In the UK it was claimed that average income was back to pre-crisis levels in 2015. In the US the same came about last year. And now with so much uncertainty, there’s no banking on wages increasing.
So, what influences salary growth?
The traditional answer includes: education, company, experience, gender, industry and location.
But there’s more to it when you’re an expat including geopolitical risk, global economic growth (or the lack of it), and, frankly, being vulnerable to any number of wranglings – whether it's where you are from or on the ground where you live. Our risks are compounded - the variables more numerous.
The other issue with peak pay earlier in life is that we’re way too busy chasing things in our 30s – partners, professional opportunity, becoming parents to name but a few. Our spend balloons as we subconsciously believe there is more money to be made and had. Who, in that state of mind, will believe their pay will never increase again?
I never went into work thinking about my peak pay – truth be told, I did not know such a thing existed. I wish I did. I wish someone had bothered to talk me through the implications of it, and how to go about saving money no matter how much I was making.
Will knowing any of this make you change your savings plan or the way you handle money? I hope so.
Surely you want to enjoy your "funky fifties", "sassy sixties", and "splendid seventies at the very least. I know I do – and beyond.
So here is an idea: make it your mission to see how much your wage has gone up by – roughly – since you started earning. You’ll be happy to see spikes along the way. The key thing is to know how you’ve fared over the last year or two. Then panic.
By panic I mean save. Heed the peak.
Nima Abu Wardeh describes herself using three words: Person. Parent. Pupil. Each day she works out which one gets priority, sharing her journey on finding-nima.com