Ever wonder where you should be when it comes to finances based on your age? Do you look around and see your collogues, friends, and family making moves that leave you pondering… “Am I in a good place?” There is no need to worry so relax. Take a deep breath. Understand you are in a place of empowerment and true change. By reading the tips listed below, you arm yourself with powerful tools to transform your financial life.
In Your 20s?
Lets face it, school does not do a good job in preparing us for the real world financially. We work hard to get the grades needed to graduate and go out into the world. College, the workforce, or the military are options we all have right out the gate. The question is… how can we do this life thing?
Financial success occurs with planning and execution. There are many strategies for different scenarios that may be different for some of you. The tools listed will still put you on the right path for your future success.
- Establish a budget: A budget informs you on where your money is going and can offer a unique perspective on where to make changes. If you do not know how to create a budget or know where to start, be sure to check our post Simple and Fun: How To Create A Budget. You will learn some great tips for checking off this task and making it enjoyable for you and your family.
- Insurance: We all work hard for our money. Life has a wonderful way of throwing curveballs at us when we least expect it or at the most inconvenient times. Preparation is essential to weathering a blow by one of the balls of life. What types of insurance do I need and why are they important?
- Life insurance: Life insurance protects your family if you were to pass on suddenly. Once your gone, your income stops flowing. Those who depend on your income would now be responsible for everyday expenses. Life insurance helps give some resources and flexibility to prepare for the income change.
- Health and disability insurance: Health insurance protects you financially from a medical event. Instead of a massive bill, this insurance will lower your obligation for treatment and medication. Disability insurance is a protection on your income should you become unable to work. There is short-term and long-term disability options depending on the situation at hand. Be sure to check with your employer on your options and what is covered.
- Start saving: Savings come in handy when things do not work out the way we expect. Building an emergency fund helps us plan and stay afloat when these things happen. Savings also help give us something to look forward to such as a vacation or a large expense. No matter your situation, savings is an essential.
- Pay off debts: You will likely build up some debts along your way. Student loans, car loans, and credit cards which can have some high interest. This high interest hits you on the wrong side of your financial line. Paying these debts off as fast as possible will not only save you money in the long run, but you will keep more on payday! Click here to find out more about your financial line.
- Start thinking about investments and retirement: You have probably heard this a thousand times by now. But the power behind this statement is so true. Doing this now will multiply and compound in a way that will be HUGE for your retirement goals. Check out how HUGE we are talking.
In Your 30s?
In our 30s we get momentum moving. We are advancing in our careers, knowledge, and experience. With that comes other things to consider with our financial health. As we move through these years, lets take the following steps to continue this momentum.
- Credit monitoring and improvement: Credit monitoring is a must to ensure your events are accurate. If something looks off, you can consider filing a dispute to get it removed or adjusted. This can increase your credit score! Be careful for anything that does not look right at all. This could be a case of credit fraud and should investigated. Improving your credit will get you better interest rates and allow you to pay less for the credit. Important for large purchases like a car or a home where the interest with the length of the loan will add up.
- Review company benefits: Companies can offer some really nice benefits for their employees. As life keeps moving your priorities shift. Pension plans, life insurance, and a 401(k) with employer matching are some of the options out there. Be sure to check with your HR department to find out what all is available to you. There could be tax free benefits and free money to tap into while helping you and your family.
- Increase your emergency fund: You should consider increasing your emergency fund to support any life events that come at you. Marriage or kids? These are events that should trigger an increase in the emergency fund due to having another person relying on you and your income.
- Make retirement a priority: We are all getting there eventually. If you have not started it is highly recommended you start. You only have so many working years to contribute and help it grow.
In Your 40s?
As with every stage in life the 40s give us a few more things to consider and talk about. Lets list them below.
- Discussing financial care and wellbeing for parents: Our parents raised and provided for us when we were unable to. It may start becoming the case for them during these years. It is important to make sure their financial health and medical care are covered. A great opportunity to start the conversation.
- Debt: It is important to revisit the debt you owe. Especially high interest debt. High interest debt takes away from you and your income over the long run and really add up. Consider your options to help put you in a better position when it comes to your debt.
- Maximize contributions to retirement: Just as the years to this point have flown by, the same will happen with retirement. Maximizing your contributions will allow you to be in a better place when the time comes.
- Investment portfolio review: If you have an investment portfolio, it is important to review the progress and ensure it aligns with your goals in life. This is an underestimated step but very important to keep you on your financial tracks.
50s And Higher?
The golden years. At this point you are now thinking about retirement and your financial health without a job. The moves below will show some considerations and hopefully keep your mind at ease.
- Find ways to lower your spending: Cutting or reducing spending can put more money in your pocket and help increase your savings. Look at your expenses and find clever ways to reduce and contribute more to your savings.
- Retirement practice: It can be beneficial to practice living on your planed retirement income to avoid a surprise. This will allow you to make a plan and adjust for the big moment and instill confidence in your ability to retire.
- Plan for long term care: Long term care may not be needed for everyone but it is important to consider and plan for it. Especially when care is paid out of pocket as it can add up.
- Evaluate your social security strategy: Your social security strategy is important as there can be some benefits for holding off just a little longer. Things like cost of living increases and an increase in benefits for waiting are things to consider in your social security strategy.
It does not matter how old you are or what stage you are at in your financial journey, the most important thing you can do is start and keep on track. This guide will hopefully put you in the right direction and give you a starting point at any stage. Keep up the good work and go get your goals!
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