Financial planning is a pressing demand that most of us feel throughout our lives. As soon as we move out of the house for the first time or start our first job, we start thinking of how to spend and save our money wisely. However, ensuring you’re meeting the proper milestones for your age can be tricky, especially if you don’t have someone to guide you along the way.
So, at what age should you start planning for your financial future?
The best answer is now. However, it is never too early to start thinking about your financial future, whether you’re a college student planning your career or are about to plan your retirement party. Below are some of the milestones you should hit in each decade of life and how a financial advisor can help get you there.
Financial Planning In Your 30s
- Start working on your credit. Credit cards were likely a lifesaver in your 20s when you couldn’t afford car repairs, holiday gifts, or sometimes groceries on a college student’s salary. However, now you need to start paying off these debts and start working toward a more positive relationship with credit so you can afford life’s next big purchases.
- Create a reasonable budget and stick to it. In your 20s, living paycheck to paycheck may have been sustainable with roommates and cheap dinners, but now you want to start using your money more wisely. Creating a budget that includes saving every month and putting necessities first will help you make sound financial habits for the future.
- Pay off student loans. Student loans are one of the most difficult loans for young people to pay off, but having that burden off your shoulders will be a significant relief. Start working on them now, so you’re not still carrying debt in your 40s.
- Start thinking about homeownership. Real estate is one of the best and simplest ways to invest in your 30s, especially if you plan to marry and have children (or already do). In addition, homeownership provides you with security and will give you more options in your future.
Financial Planning In Your 40s
- Start investing more heavily in retirement. You likely have started investing in retirement already through 401Ks and other work-related retirement accounts. However, the more you invest in retirement now, the better your financial future will look in your 50s and 60s.
- Talk to a financial advisor about wills, estate planning, and life insurance. You may not have significant savings now, but you will in 10 or 15 years. The sooner you prepare your family for emergencies, the better they will fare. This also gets some of these headaches out of the way so you can focus on retirement planning in your 50s.
- Save for college tuition. If you have children, college isn’t too far around the corner. If you want to send your kids to a good school, investing in a college fund now will make it easier for them. You may have already started this when your kids were born (and if so, good for you!), but if not, it’s never too late to start investing in college educations.
Getting Ready For Retirement
Most individuals retire between 65 and 70, so your 50s and 60s are considered “crunch time” to get ready to live off your savings. If you’re in the Red Zone of retirement, here’s what you should be planning:
- Make significant home repairs and purchases while you’re still earning. Once you retire, making big purchases will be harder on your budget than it is while you’re still earning. So plan ahead and make upgrades to your home and lifestyle (such as buying a new car, remodeling, or purchasing a new home) before you retire.
- Consider your future budget and living expenses. Most people believe that they can live on 75-80% of their current income through retirement, but this often doesn’t account for the increased cost of living as time goes on. Be honest about your needs and budget sparingly to ensure you don’t spend more than you should in the first few years.
- Decide if you want to move after retiring. You may want to consider moving out of the big city if you no longer need to be there to work. Nearby cities/states may offer a more affordable cost of living while staying close to family and friends. You can also avoid the hustle and bustle of the big city this way and spend your retirement in a relaxed suburban environment.
- Learn about Medicare and supplementary insurance. Your health costs will continue to rise as you get older, so be prepared with information as you start looking at Medicare and supplemental insurance plans.
With the help of a OneAscent advisor, you can meet all of these milestones and invest wisely, so you have a nice nest egg for retirement. If you have questions or want to start investing in your retirement today, give us a call.