Financial Moves You Should Make at Each Age of Your Life
Growing older can sneak up on you! The passage “partying until dawn” quickly changes to “getting up for work at dawn.” And as you age, you change. You evolve and discover new hobbies, relationships and adventures. Shouldn’t your personal finance strategies and money management change as well?
For whatever stage you are at in your financial journey, here are the savviest budgeting and financial moves you can make during each season of your life:
0 to 18 Years
The years of your youth are about learning and exploring the ways of the world. In finance, that means understanding common financial terms, like compound interest and saving.
One way to get ahead is to expand your education into finances. Schools tend to only focus on the basics: reading, writing and arithmetic. Sometimes they miss teaching material that will serve an essential purpose as we age. Ever heard the common, adult financial woe, “I’m doing [insert some tedious adult chore here], but still don’t know how to balance a checkbook?”
Well now’s the time. Imagine if all children had to take a class that covered the basics of personal finances and responsible money decisions. The good news is you can learn financial basics on your own or with your family. You're never too young to start tracking your spending and evaluating things that secure a great financial future and offer you a safety net.
Here are some basic financial literary apps for children to interact and explore why money matters.
At the end of adolescence, you should understand the responsibility of having a bank account, the power of saving, and the importance of financial budgeting (wants vs. needs) to get there.
In this decade of disposable income, it’s time to put your primary learnings to work and establish good financial habits.
Student loans, car loans, credit cards… seeking financial independence doesn’t come cost-free. It’s important to understand the basics of debt, building your credit score, and when loans can help or hurt you most. Our bottom line? Don’t ever take out more than what you need or use more credit than what you can comfortably pay off. According to Experian, more and more millennials are finding that personal loans can help consolidate debt and streamline payment plans.
Optimize Your Work Benefits and Max Out Your 401(k)
Entering the “real world” means first full-time job opportunity. Learn what your company offers regarding insurance and 401(k) contributions, and make sure you’re matching it. If you’re not sure, ask. Any company HR representative would gladly take the time to walk through your options.
Create and Follow(!) a Budget
Being 20-something means living paycheck-to-paycheck and creating a financial budget. Think back to your “needs vs. wants” baseline and decide how much you’re bringing in each month compared to how much is going out. It doesn’t mean you can’t party until dawn, rather, consider what you’re giving up to make fun priorities happen. Are Thursday happy hours worth giving up a week-long vacation to LA? Fighting the urge to splurge now can get you on track to less debt and more “flexible fun” down the road.
Build an Emergency Fund
Because life happens. Build an emergency fund to prepare for a short-term, one-time expense. Do this by taking out a small part of each paycheck, perhaps 2% of your annual salary. For example, if you make $50,000 per year, set aside $1,000 for an emergency.
Life Insurance is Not Just for the Elderly. Get Some Today.
Trust us, you’ll want life insurance eventually, so buy it when the premium cost is lower (as a general rule, life insurance is less expensive the younger you are when you initially buy it).
When your partying days are over, you find yourself with more responsibilities and less loose cash.
Make Your Money work with Diversified Investments
Don’t put all your eggs in one basket. Do your research, stay up on business trends and invest. Some financial advisors will even help invest your money for you.
Do You Have Enough Insurance?
Perform a mid-point insurance check. Is everything measuring up? We promise you won’t regret it.
Start Saving for Your Child’s Education
You know best: college is expensive! Start your saving now to help optimize interest. Think about your options (without compromising your retirement) and plan a college-savings strategy. Later, your child will thank you.
Protect Your Family. Make an Estate Plan.
A sensitive, but important, subject that goes beyond creating a will. A good estate plan focuses on your net worth and properly evaluate your family needs. Hiring a planning attorney can help get everything in order.
Your 40s to 60s
What will your retirement look like? What will you leave behind for your children?
- Decide how much you need to retire comfortably. Make a plan to get there.
- Meet with a financial advisor. They can help you stay on track.
- Discuss care of aging parents with your extended family.
- Review your estate plans every 2-3 years. Make changes as necessary.
- Keep saving! Are you on track to retire? Keeping filling up your 401(k), education funds and personal financial accounts.
Your 60s and Beyond
Your golden years should be filled with true financial freedom. A little maintenance will make sure what you have squirreled away will comfortably last a lifetime.
- Sell your home and opt for a rental to help reduce monthly costs.
- Keep your estate plans up-to-date.
- Delay collecting your Social Security until age 67 to maximize benefits.
- Take a deep breath… and enjoy yourself! You earned it!
Ensuring the “Time of Your Life”
When it comes to money management, age is more than a number. Throughout your life, the best approach to personal finance is sticking to a budget and saving whenever you can. And remember that financial responsibility is always the best financial strategy, at any age.
*There is no affiliation between Rocket Loans, Mint, Kiplinger, Experian, Forbes and Bankrate. Rocket Loans does not vouch for or assume any responsibility for the content, accuracy, or completeness of material presented directly or indirectly in linked sites.
Table of Contents
What is Debt Consolidation (And Does it Make Sense for You)?
Explore Your Options - 3-Minute Read
Debt consolidation is a strategy you can use to combine multiple debts into one easy-to-manage payment. Read our article on what it means to consolidate debt.