We all know the drill: balance your budget, pay off debt, save for retirement. It sounds simple, but the truth is that managing our money can look different in every stage of life. We’ve gathered some tips from local finance gurus on what choices we should be making and when.
For the Twenty-Something: Work Hard
According to T. Wayne Fanning of New York Life Insurance Company, the key to success in your 20s is to be cautious of what you go into debt for and to grow accustomed to extending your financial vision. Understand the difference between good debt and bad debt, and try not to spend on things that only provide immediate gratification. Ask yourself before making big purchases: “Do I need to have this today?” If the answer is “no,” wait until you are sure you have the means for it. As far as student loan debt, try to be free of it before you purchase your first home.
“Work as much as you can,” recommends Terry Grassley, Vice President at Customers Bank in Wyomissing. This is likely the easiest stage of life to work those overtime hours, before you start a family. Be patient as you are working; financial independence and success take investment of time and effort. Forming the habit of budgeting is important too. Even though it can feel stifling initially, creating a budget will actually provide greater freedom in the long run. There are many online tools available to make budgeting easier, and it can be a helpful way to get started. Become friends with your banker, and become as educated as you can regarding your financial options.
Your 30s: Gather Wealth
For many, your 30s will be the years in which you settle down, purchase a home, and start a family. If you haven’t already, this is the ideal time to begin strengthening your savings plan. The key for this decade is to choose a financial advisor and to begin to accumulate wealth. Create a portfolio with an advisor you feel comfortable talking to; they can answer questions and help ensure you are on the right track. It is all about building for your future: the younger you start with the right plan, the less you will have to do in later years.
Grassley expresses, “It’s a marathon, not a race” to financial success. There are many small, daily decisions that can lead to a better outcome. It is important to be prepared for unforeseen changes and to protect yourself against loss. Did you start a family? Consider committing to an education fund for your children. No longer being independent means making choices that reflect your new responsibilities.
Your 40s: Evaluate and Prepare
“It’s half-time now; be educated on what you’re doing,” Fanning advises. As you come into your 40s, retirement should be something you commit to in a more significant way. You may even begin to get excited about it! Work with your financial advisor to begin understanding what your budget will be like once you retire. Credit card debt is easy to fall into, but try to steer clear of it. Pay down the mortgage on your house the best that you can. As with all debt, be sure to pay off things with the highest interest rate first.
Thinking of investing? For some, it’s a worthwhile endeavor, but make sure you understand what you’re doing before you take unnecessary risks. Get guidance from professionals on how to invest with the means that you have. Be educated on all of your expenditures and your income. It’s a great idea to start your kids on a budget plan and to teach them early how to be smart with their money. You’ve likely learned this by now, but there are many tools available to you for managing a home, a career, and a retirement plan. Be sure to make good use of them.
The Later Years: Reaching Retirement
Repeated evaluation is essential as you grow closer to and enter retirement. Stay focused and committed to your plan. At this point in life, it’s healthy to have a solid mix of accounts and resources. Consider your health care, living costs, and overall lifestyle: Can you sustain this with what you have set aside? Understand that you are responsible for yourself, and you will need to adjust your expenses when you finally enter those hard-earned retirement years.
If you feel stuck, there are many trained professionals who will be able to help you see outside of your world and consider all the options you have in front of you. Managing finances well can seem daunting, but the benefits of doing so can vastly improve your life. Thankfully, it’s never too late to seek out helpful resources and get educated on how to be smart with your money.
