Financial Milestones for Every Age
Mapping out a financial plan for the future can help you reach many of your objectives. Being aware of important financial milestones that should be reached at various stages of life will enable you to stay on the right financial track. Here are important financial milestones for every age.
In your 20s
Build an emergency savings fund. One of the best pieces of financial advice is to build an emergency savings fund early. This is a separate savings account that can be used to cover any emergency or unforeseen expense. Many financial experts recommend saving anywhere from three to six months’ worth of salary in an emergency fund.
Start saving for retirement. While saving for retirement might be the last thing on your mind when you are in your 20s and just starting your career, it is important. This includes signing up for your employer’s 401(k) and saving contributing enough to get any matches.
Pay off student loans and other debt. Paying off your student loans early can help you save, as it gives the debt less time to accumulate interest. Paying off your loan in a steady manner is also great for your credit rating. Once you have your student loans paid off, it will enable you to focus on other goals.
Secure health insurance coverage. If you have a job that pays for all or part of your health insurance, you are in luck. Be sure to opt-in as soon as you are eligible. If not, enroll in another plan. Without health insurance, you have to pay the full cost of medical care, and it could drain your savings.
Begin saving for financial goals. This might include becoming a homeowner, starting a family, or launching a business.
Focus on establishing a good credit history. Pay your bills on time, keep your credit utilization low, and don’t apply for too many credit cards. Your credit rating is important.
In your 30s
Focus on retirement savings. By age 30, you should have one year’s worth of salary saved for retirement. If you don’t have this, it’s time to pick up the pace. Experts recommend you contribute 15% of your income towards retirement. Open and fund an IRA in addition to your 401(k).
Pay off leftover debt. If there is any student loan or high-interest credit card debt that is still lingering, pay it off in your early 30s.
Keep your credit score up. As mentioned above, pay all of your loans and bills on time and stay well under your credit limit. Check your credit reports each year for accuracy. 670 to 739 is considered a good score. Higher is even better.
Focus on saving for your financial goals. A higher down payment on a home will provide you with a lower monthly payment.
Purchase life insurance. If you have a spouse or dependents who are relying on you for financial support, life insurance is important.
Prepare a will. This is essential as you begin to grow your family.
Begin planning for your children’s college.
In your 40s
Maximize your retirement contributions. By 40 you should have three times your income saved for retirement. By the time the decade ends, and you hit 50 that amount will double and should be six times your income.
Modify your monthly budget. In your 40s, you should rework your monthly budget to focus on retirement savings and paying down your mortgage and other debt.
Have dedicated savings for your children’s college expenses.
Focus on diversification of investments.
Improve your job skills for advancement in the workplace.
In your 50s
Continue to maximize retirement contributions. This includes making catch-up contributions.
Consult a financial advisor. It’s smart to consult a professional to help plan your finances and provide a roadmap for retirement. This includes tax planning for retirement.
Work on eliminating mortgage and other debt.
Review your will and life insurance.
Consider investing in long-term care insurance.
In your 60s
Finalize your retirement plans. You should have 8X your salary saved by the time you hit your 60s and are preparing to retire. You might make moves to downsize to better prepare your budget for retirement.
Adjust your investments for lower risk.
In your 70s and above
The golden years. Make your "golden years" truly golden by continuing to invest smartly and live within your means. Budget and save wisely to enjoy many more years of financial security.
Products and services to help you meet your financial milestones for every age
Spirit Financial provides the financial products and services you need for every stage of life, from checking, savings, money market accounts, and IRAs to mortgage, home equity, auto, and personal loans. We’re here for your every need.