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How does age affect your finances?

Start saving in your 20's
Start saving in your 20's
Photo Credit: <a href="">LyndaSanchez</a> via <a href="">Compfight</a> <a href="">cc</a>

As people age, financial focuses will change right alongside. From their twenties to their forties, financial needs will grow and evolve. It is up to each person to know what is needed and how to go about doing it. The following are three decades of important financial topics to both understand and implement when making financial goals.

During your 20’s

Learn about money - With or without a college education, those people in their 20’s will want to learn as much as they can about a lifetime of financial information. It is the best time to organize your budget and set up goals for your future. Monitor the plan regularly.

Start saving - Begin an emergency fund to soften the blow of unexpected financial problems. Set a goal to save at least six months of monthly expenses to help support a job loss or medical emergency.

Look to your future - Even in your 20’s, it is important to think about your retirement years. If your company offers a 401k plan, take advantage of the benefit. You will want to invest at least the amount the company will match which is usually about 3% of your income. No company plan? Meet with a financial adviser to open a Roth IRA and begin saving.

Moving into your 30’s

Max retirement savings - In order to fully fund your retirement, you will by now want save the maximum amount each year. Use automatic payments to help keep the process in motion.

Watch consumer debt - Consumer debt can sneak up on people in their thirties. A home, children and vacations can rack up debt. Don’t let your lifestyle creep up on your budget. Keep consumer debt minimal.

Buy a home - If you haven’t done so already, buying a home is a great way to invest in your family’s future. The key to a successful purchase is to shave off at least 30% off what you think is affordable. You want to more than afford your home. A smaller home mortgage will help protect your finances each month as well as make it easier to pay the home off before you hit retirement age.

College Savings - If you plan to make a contribution to your child’s higher education, begin while they are young. Look into your state sponsored plans or seek out advice from financial planners.

Reaching your 40’s

Retirement, retirement, retirement - Don’t interrupt your retirement plan for any reason. It is recommended to never borrow from it for any reason.

Monitor college saving plans - Now that your children are closer to college age, investigate tuition costs and compare to what you have saved so far. You may need to step up your saving contributions. Realistically think about affordable colleges so no one is left deep in debt after graduation.

Invest - If you have extra money saved, look into investing in an index fund portfolio. Set up an automatic purchase plan that will continue to grow your account without having to manage it.

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