My parents opened a savings account for me shortly after I was born to deposit any money I received from birthdays to babysitting jobs. I opened my first checking account after I started my first ‘real’ job at 16.
After applying for my first credit card (with a $300 credit line) when I entered college, I recall being scared to death because I had heard so much about how easy it is to rack up credit-card debt.
However, I was determined to use it appropriately to build my credit. I felt I had a good financial foundation since money management was something I learned as I grew up – I saw my parents writing checks, balancing their checkbook and saving their money. But like any kid, it didn’t truly hit home until I was the one writing the checks and balancing the checkbook!
It’s not always as easy as you think! There is still a lot I don’t understand about money, especially what I need to do as I get older. If you’re in the same boat as me, here are some tips for managing your money each decade of your life.
In your 20s…
- Set financial goals – It’s important to identify what you want, when you want it, and what it will take to achieve it.
- Create a budget – There are many websites that can help you set up a budget – this will help you understand how much money you’re bringing in and how much you’re spending. It will also help you see where you can cut out unnecessary expenses.
- Enroll in your company’s 401K – Many companies will match your contributions to a certain percentage – this is basically free money for you, so it’s smart to maximize your contributions to your company’s match.
- Start paying off college or credit card debt.
- Work with a financial advisor — This can help you achieve your long-term financial goals, develop a financial plan and maintain your plan as your needs change and opportunities arise.
In your 30s…
- Set up an emergency fund – It’s a good idea to have three to six months of living expenses saved for unexpected situations.
- Save for a down payment for a home – Ideally it’s best to have 20 percent down on your future home to avoid paying Private Mortgage Insurance (PMI), but most loan programs allow 5 to 20 percent down.
- Set up a college fund for your children — 529 Savings Plans are a good way to save for college. With any 529 plan, money you invest will grow without being subject to federal income tax. You can also avoid paying federal income taxes on any money you take out of the plan—so long as you use it to pay for qualified educational expenses, such as room and board, tuition and books.
In your 40s…
- Establish your will and trust – It’s also helpful to review your life insurance policy and begin estate planning.
- Consider a home equity loan to update or renovate your home.
- Talk to your financial advisor to make sure you’re maximizing your savings.
In your 50s…
- Cash in on discounts – Many companies and stores offer discounts once you turn 50.
- Pay off your mortgage – Put the money that you would use to pay your mortgage into savings so you can save more for retirement.
- Be conservative in your investments.
- Plan your retirement exit strategy – Know when to apply for your pension and review your health insurance options.
Everyone’s road map will look different and I’m curious to see if you have any financial tips for your generation you’d like to share! Use the comment section below!