No matter your age, good money management is important. While some things remain constant at every stage of your life, like the importance of paying bills on time, other things may fluctuate based on your age or life stage. We’ve put together our top tips for each age in our infographic below.
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Financial Tips for Your 20s
Your 20s are a decade full of change – you evolve from a relatively recent high school grad into a young professional with a significant amount of new responsibilities. With so many new things happening during this time of your life, it’s important to get a solid grip on your finances now so that you have a sturdy foundation to build on for the future. Here are a few key things to start considering, if you haven’t already:
- Don’t open a lot of credit card accounts – You’ll likely start getting credit card offers regularly in the mail. It can be tempting to apply for them, especially when they offer enticing benefits like a 0% introductory APR, discounts at your favorite stores, or the ability to earn points for flights or hotel stays. However, you should carefully consider each card before you apply. Every account you open will likely require a hard pull of your credit, which means it’ll impact your credit score. Before applying, make sure you read the terms and conditions carefully. While a low introductory APR may sound great, what is the APR once the introductory period is over? Are any rewards you earn outweighed by an annual fee?
- Get renters insurance and life insurance – It’s easy to feel invincible when you’re young, but emergencies or tragedies can happen at any age. Having the proper insurance in place can provide a safety net if one does.
- Start saving for retirement with your first job –When you’re completing new hire paperwork for a new job, ask questions about your retirement plan options, such as if your company provides any kind of matching funds for money you contribute. If your company offers a match and you don’t take advantage of it, it’s like leaving free money on the table.
- Get in the habit of paying yourself first – Even if you’re only able to set aside a small amount each pay period, saving is an important habit to develop. While your goal should be to have an emergency fund that can cover three to six months of expenses, any amount can help in the event of an unexpected expense or emergency. For instance, if your car battery dies, having even $100 in a savings account can keep you from having to charge or borrow the amount you need to replace it.
- Manage your own finances, even if you get married – Managing your money can feel intimidating and it can be easy to let your partner take the reins. However, this is a risky decision. Letting someone else manage your finances can skew your view of your financial well-being. It’s important for you to stay informed of what your expenses are, when they’re paid, and how your budget is set up, among other things. Talk to your partner about what will work for both of you to feel comfortable.
- Establish or revise your budget – If you haven’t set up a budget, the time to do so is now. Having a budget helps keep your spending in check and gives you a more accurate view of your cashflow – exactly how much you’re earning and how you’re putting your funds to use. If you need help getting started, check out our quick tutorial on how to build a budget.
- Build up your credit – You’ll likely make a few large purchases in your 20s, like a car and possibly your first home. Having a good credit score will make both processes easier and give you access to better rates. Learn about the components of your credit score and how you can get access to a free monthly update.
Financial Tips for Your 30s
As you head into your 30s, you’ll likely continue taking on increased responsibility in both your personal and professional lives. During this time, it’s important to balance taking care of these responsibilities now and planning for the future. Here are a few tips to get started.
- Plan for future college costs now – If you have children, now matter how young they are, it’s important to start thinking about their future. If you’ll encourage your children to attend some form of post-secondary education, you’ll want to start considering if and how you’ll help them cover the cost. Planning ahead can help you and your children from taking out large student loans or pulling from other funding sources, such as your retirement fund, to cover the cost.
- Be wary of high-interest store credit cards – With more established credit comes more “preapproved” offers for credit cards, often at stores you frequent. You may be enticed to apply for cards that will save you a set percentage every time you shop or give you appealing offers when you sign up, but be careful not to get sucked in. Store credit cards often have high interest rates that can outweigh any money you save if you don’t pay them off in full each month.
- Start considering your future financial needs and goals – Seek the advice of trusted advisors to address your long-term planning needs. You’ll want to make sure you’re on track when it comes to saving for retirement and have the proper paperwork in place to protect your family if you become ill or pass away unexpectedly.
- Don’t get sucked in – If you’re running errands with a child in tow, it can be easy to get caught up in buying them something every time you go to the store – whether it’s a snack while you grocery shop or a new outfit when you run to the mall. Stopping this habit early on won’t just save money, but it will teach your child delayed gratification, which will help them when they’re managing finances of their own.
- Don’t become “house poor” – When you buy a home, make sure you understand all the associated costs that are in addition to your monthly mortgage payment. Remember to factor in taxes, homeowner’s insurance, and ongoing maintenance costs, as well as plan for unexpected costs that may arise.
Financial Tips for Your 40s
In your 40s, you’ll likely have many competing priorities, ranging from caring for your growing children to helping parents who may be transitioning to retirement and from addressing your personal needs to balancing your responsibilities at work. It’s important to take time at this age to fully understand and define your financial needs and goals and make it a priority to work toward them. Here’s a list to help you get started.
- Learn how to say “no” – Between your children’s school fundraisers, your coworkers’ children’s sports fundraisers, and charitable requests at every turn, you’ll likely feel increased pressure to give your money away. While sharing your money with causes you care about is an important part of money management, you’ll need to set boundaries and learn to say “no” sometimes in order to keep your own finances in check. Decide which causes you’re truly passionate about and limit your financial donations to organizations that address those. In other situations, consider donating your time or talent instead.
- Protect your retirement fund – You may be tempted to use funds you’ve built up in retirement accounts for home repairs or your child’s educational expenses, but think twice before you do. Borrowing from your future financial comfort for an immediate need can have a long-term impact. In addition, there may be fees or penalties for early withdrawals that cost you even more. Check in with a trusted financial advisor before making any decisions that could harm your financial future.
- Help your children get ahead – If they don’t have one already, open a savings account for your child. Use the account to help them learn the importance of saving from a young age. Consider adding a checking account to help them manage paychecks from any part-time jobs. Teaching them how to use these accounts can help them gain good money management skills before they leave home.
- Don’t worry about keeping up with others – When a neighbor redoes their kitchen or buys a new car, it’s normal to feel a tinge of jealousy. This can get financially dangerous if that jealousy turns into a need to compete with or outdo those around you. Remember, though, that competing over material items will likely only land you in debt. So, while it may feel temporarily satisfying to have the nicest car on your block, you may be regretting its purchase when your monthly payments are due.
- Start planning seriously for the future – Continue to meet with a trusted advisor to map out a path to your retirement goals. As you get more and more work experience, you may also see an increased income. Make sure you’re putting it to work for you and that you’re setting yourself and your family up for long-term financial success.
Financial Tips for Your 50s
As you get closer to your retirement years, it’s important to make your own financial health a priority and ensure that any decisions you make don’t throw your progress off track. Here are a few ways you can make that happen.
- Have the tough conversations with your family – It’s not fun to think about, but you’ll want to make sure that your estate planning and long-term care needs and wants are clearly spelled out. And you’ll want to make sure you have the tough conversations and proper documentation in place to help your family follow them.
- Think before co-signing loans for anyone – Whether it’s your child or a close friend, co-signing a loan comes with big risks. As a cosigner, you’re responsible for repayment of the loan if the primary account holder doesn’t make their payments. This can make you accountable for monthly expenses you weren’t counting on and can hurt your credit if the payments aren’t made on time.
- Frequently review your progress – While planning for retirement has likely started before now, it’s important to keep an even closer eye on your accounts as you near retirement age. You’ll want to make sure that you’re maximizing any employer matches and that you have funds allocated in the most beneficial way.
- Make a debt repayment plan – Carrying debt at any age is stressful, but it can become even more so when you’re no longer bringing home a paycheck every month. Take an inventory of all the debts you’re carrying and create a plan to pay them off. Consider starting with putting extra funds toward the debt with the highest interest rate so you can minimize how much you pay back.
- Continue monitoring your credit – Keeping an eye on your credit at any age is a good way to protect against fraud. Checking your credit report can help you identify fraudulent activity and report it to credit reporting bureaus.
Financial Tips for Your 60s
There are a lot of perks to being in your 60s – you may start to qualify for additional age-based savings, be finishing up your working years, and have more time to spend with family. You’ve worked hard to get this far and there are steps you should take to enjoy your golden years without unnecessary financial worry.
- Watch out for grandparent schemes – Many fraudsters will take advantage of the compassion of grandparents. They do this by calling or emailing and pretending to be your grandchild who is in trouble and in need of immediate financial help. Be wary of this and any other urgent requests for money to be sent or wired.
- Be realistic about retirement – Now that you’re approaching or beginning your retirement, it’s important to keep a realistic view of your finances during this time. Review your anticipated assets, income, and expenses and make a plan. While you may not have income from an employer, you’ll still need to follow a budget and manage income funds you’re receiving.
- Take advantage of discounts – Senior discounts are a great perk that can lead to big savings. If you don’t see an advertised discount, it never hurts to ask about one. You may get a set amount or percentage off purchases on anything from cell phone plans to restaurant meals.
- Know your resources – If you hit a bump in your retirement, there are several resources available to help. Many programs work to lower the cost of living for seniors, particularly expenses related to health. If you don’t know where to look, consider asking employees at a community center, church, or other organization that may be familiar with these resources.
- Continue planning ahead – Give yourself and your family peace of mind by making sure that you keep your long-term care and estate planning documents and wishes up to date. Have regular meetings with your trusted advisors and provide clear instructions and communication to your family members.