Smart Financial Moves in Your 20s, 30s, 40s and 50 & Over
Summary
Like any winning strategy, planning in stages can be helpful. Here are some smart financial moves to make starting in your 20s and past your 50s.
In this article:
Financial success doesn’t just happen. It takes planning, execution, monitoring and knowing when to adjust your strategy.
Each decade of your life offers opportunities to help make financial success possible. No matter where you are in life, here are some moves you can make to set yourself up for future success:
Smart financial moves in your 20s
Establish a budget Creating a budget in your 20s can help teach you the value of fiscal responsibility. If you need help getting started or staying on task, here are some simple tips for making and sticking to a budget.
Start a savings habit – When it comes to saving, a little now can turn into a lot later. Brew coffee at home. Pack your lunch for work. Buy in bulk. It's important to ask yourself what kind of saver you are so that you can determine the best way to save. Once you create good savings habits, they could positively influence your overall spending and help you establish a routine.
Get insured – Accidents happen. If you’re not insured, a medical injury or home emergency could cost you thousands of dollars. Here are some common types of insurance to help you get started:
- Life, health and disability insurance
- Auto insurance
- Homeowners and renter’s insurance
- Flood insurance
Make a debt repayment plan – Maybe you recently finished school and have student loans to pay. Maybe you bought your first new car and are financing the payments. Whatever the reason you may have incurred some debt at this age, make a plan to repay all of it before you try and tackle other future life expenses. If you can head into your 30s without debt and having an emergency fund built up, you’ll be ahead of the life game. Which leads us to the next bullet:
Start an emergency fund – Nearly 40% of Americans said they couldn’t afford an emergency expense of $400.1 By saving for the unexpected, you could reduce the risk of going into debt. Here’s some advice on how to create an emergency fund.
Smart financial moves in your 30s
Prioritize your retirement savings – Advisors recommend that you should have the equivalent of twice your current annual salary saved for retirement by your 35th birthday.2 If you need to get started or ramp up your efforts, try these smart ways to save for retirement.
Monitor and improve your credit – Establishing good credit can benefit your finances now and in the future. To check your reports for free every 12 months from each credit reporting company go to AnnualCreditReport.com. If you could use some advice on tracking and boosting your credit, check out these tips to improve your credit score.
Utilize your company benefits – Are you enrolled in a pension plan or a matching 401(k) at work? It could be time to reexamine your benefits package and take full advantage of what’s offered to you.
Consider investing – Supplementing your retirement savings with an investment portfolio could be a smart move. These days, you don’t need to be rich to invest. If you’re unfamiliar with the stock market or investing in general, you should seek the guidance of a financial advisor or other qualified professional.
Increase your emergency fund – A safe minimum amount for an emergency fund is around three months of living expenses. However, if you have a spouse and/or children, it may be time to start stashing away more money in this account.
Smart financial moves in your 40s
Maximize retirement contributions – If your budget allows, put as much money into your retirement accounts as possible. Employees can contribute up to $19,500 to their 401(k) plan in 2021.3
Consider refinancing your mortgage – If you own a home, getting a better rate on your mortgage can save you thousands of dollars. However, it’s not always the best move for everyone. See where you stand by reading these tips on when (and when not) to refinance your mortgage.
Discuss plans for your parents – One in five middle-aged adults have provided some type of financial support to a parent older than 65 years.4 If one or both of your parents are still living, discuss potential financial needs with them and include any relative who wishes to join the conversation.
Pay down high-interest debt – If you have outstanding debt, try to place emphasis on paying down accounts with the highest interest rates first. If you’ve accumulated multiple debts over the past two decades, it may be time to consider a debt consolidation loan. By reducing or eliminating your balances on higher rate debts, you can potentially save on interest and increase your financial security.
Revisit your investment portfolio – From annual checkups to major life milestones, there could be many reasons to revisit your portfolio and reshape your financial future.
Smart financial moves at 50 & over
Take advantage of 401(k) Catch Up Contributions – Once you hit 50 years of age, you can put an extra $6,000 into your 401(k) each year in excess of the standard limit. Dubbed the “Catch Up Contribution,” this rule is meant to help people speed up their saving efforts before retirement.
Map out your social security strategy – If you can afford to hold off on claiming Social Security, it can really pay off. You can file as early as age 62, but if you wait until full retirement age (currently 66), you’ll get 33% more than at age 62.5 If you wait until age 70, you’ll get 76% more than at 62 in addition to all of the cost-of-living increases during that time.6
Plan ahead for long-term care – The average cost of long-term care, when paid out of pocket, is $140,000 per year.7 If you believe you might need this type of care later in life, check out these facts and tips on the long-term care provided by the U.S. Department of Health and Human Services.
Explore ways to lower spending – Some expenses can decrease or be eliminated the closer you get to retirement (daily commute, work wardrobe, etc.) Look at your spending and find ways to put more money into your savings account.
Conduct a retirement “practice run” – To get a true picture of the retirement lifestyle, spend one month living on your planned income. This can help you test the financial allowances you have in place and make any last-minute adjustments.
Set yourself up for success
No matter what stage of life you’re in, it’s never too late to start planning for success. Hopefully these tips will help you recognize and define goals for your own financial future. Stay positive, stay focused and make it happen!
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This article has been updated from its original posting on August 5, 2019. Infographic design created August 8, 2019, by Zac Willett. |
1. Boesler, Matthew. “Almost 40% of Americans Would Struggle to Cover a $400 Emergency.” Bloomburg.com. (accessed July 22, 2019).
2. Martin, Emmie. “Here’s how much money you should have saved by 35.” CNBC.com. https://www.cnbc.com/2018/11/12/how-much-money-to-have-saved-by-age-35.html (accessed July 22, 2019).
3. https://www.kiplinger.com/retirement/retirement-plans/601632/bad-news-on-ira-and-401k-contribution-limits-for-2021
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4. Crawley, Mary. “4 Smart Money Moves for Your 40s.” Fool.com. https://www.fool.com/retirement/2017/11/13/4-smart-money-moves-for-your-40s.aspx (accessed July 30, 2019).
5. Clark, Jane Bennet. “5 Money Moves in Your 50s as You Ramp Up to Retirement.” Kiplinger.com. https://www.kiplinger.com/article/retirement/T047-C000-S002-5-money-moves-in-your-50s-as-you-ramp-up-to-retire.html (accessed July 22, 2019).
6. Clark, Jane Bennet. “5 Money Moves in Your 50s as You Ramp Up to Retirement.” Kiplinger.com.
7. Stark, Ellen. “5 Things You SHOULD Know About Long-Term Care Insurance.” AARP.org.
This article is for general education and informational purposes, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any purpose and is not intended to be and does not constitute financial, legal, tax, or any other advice. Parties (other than sponsored partners of OneMain Financial (OMF)) referenced in the article are not sponsors of, do not endorse, and are not otherwise affiliated with OMF.
