The finances of three generations of women

The size of your income and the way you spend it is likely to change throughout your life. So what can three generations of the same family expect life - and their bank balance - to throw at them?

The student and graduate

Leaving University these days means you are likely to have debts of around £12,000 through credit cards, bank and student loans. Research from Barclays Bank shows this amount has increase five-fold in the last four years and leaves a financial millstone round the necks of graduates.

Starting a career will provide an income to help pay back what you owe but women are still scandalously behind men when it comes to salaries. The average woman earns £20,592, which is 18% less than her male counterpart. It would be lovely to spend your wages on fun and games while you are young and single. The truth is that you can't afford to forget about your finances and now is the time to plan for the longer term, however far off that seems. Getting into good habits with money now will pay off in years to come so aim to pay off your debts as quickly as you can and start saving.

Old age and retirement are going to be the furthest things from your mind but this is the best time to get your pension started. Find out if your employer offers a pension scheme. If they do then the chances are they will also make contributions on your behalf and these are well worth having. This is also likely to save you cost of setting up your own scheme, which is something you should do if your employer does not offer one. The earlier you start paying into a pension the better. If you have a personal pension, remember to increase payments as your salary increases. Pay in as much as you can afford. Experts reckon that you should halve your age to get the percentage of your salary to be set aside. So a 24-year-old setting up a pension plan should save 12% of their earnings - minus any contribution their employer makes.

It may be tempting to live with your parents for as long as possible to save money. When you are ready to buy your own pad, do some research and take advantage of the constant stream of new products and schemes designed to help first-time buyers. If you cannot afford a mortgage on your own, you may be able to take one out with your parents acting as guarantors or buy with a friend.

The mother

If you have climbed up the property ladder then you could have equity in your home and may even be considering buying another property to let for income or investment. Of course you could also make improvements to your own home or just blow the lot on a cruise. You no longer have to pay for nannies and school holiday treats but the chances are you will want to help your children pay off any University debts or provide some support when they want to buy a car or even their first home. The 'Bank of Mum and Dad' never closes. You may have other dependents such as elderly parents to consider, too.

With all these demands on your time and money, you should make sure you have adequate life assurance. Legal & General's 'Value of Mum' study shows that if tragedy struck Mums today then Dads would have to find a whopping £21,184 a year on average if they wanted to pay someone else just to keep the home running. This is one area where women have the benefit of paying less as they live longer than men. You may want to include critical illness cover, which pays out a tax-free lump sum if you are diagnosed with a serious condition such as cancer or a stroke.

It may seem morbid but it is essential to write a will. Without one, dying 'intestate' and can mean months of legal and financial headaches. If you are married with children: Your spouse gets everything up to £125,000 plus your personal possessions. (If your property is worth more than £125,000, your spouse could lose their home). Anything remaining is divided in two: - half goes to your children when they are 18 years old and half goes in trust during your spouse's lifetime (he or she does not have access to the capital – only income from the capital). On your spouse's death, this half goes to your children.

Now is the time to pay as much into your pension as you can afford. An employee can pay up to 15% of salary and perks into a company scheme.

The grandmother

You can start drawing on private pensions from 50, although you will usually get far better value if you hold off. Your pension provider, or an independent financial advisor should be able to give you an assessment of the income that could be derived from your private pension savings. If you were born before April 1959 you will start receiving state benefits at 60, but the state pension age for women is equal with men at 65 for those born after that date. The law requires you to buy an annuity with most of your pension pot by the age of 75. When you do, it is best to shop around to find the annuity with the best return.

Consider taking out long term care insurance, designed to pay out a monthly benefit which can be used to pay for the type of care you may want or need in old age. Help the Aged can provide details on the options available. This is also a good time to review your will and use it reduce the inheritance tax payable on your estate.

At this stage, you might wish to adjust the level of risk you take with any investments or stocks and shares so that you can avoid any unexpected blips. If you are investing for your grandchildren then keep the money in high interest accounts. If you can tuck money away for them or for yourself for longer than five years then consider share-based investments such as unit trusts or investment trusts. Individual saving accounts - ISAs - can be used to build up tax-free savings.