Setting Financial Goals at Every Age

Setting Financial Goals at Every Age

Setting financial goals is often difficult, and that doesn’t change with age. While your goals will vary greatly, the process of establishing and completing them may not. To help ease the process, it can be useful to develop a general layout of financial goals for your future. This way, you can work toward the goals at your leisure, but have something of a layout to guide you along your way.

In your 20s

When you are in your twenties, you have to begin thinking more seriously about your financial goals. First, you’ll need to think seriously about your credit–and how to improve it. Your credit becomes important, and your history will help determine your overall score. Credit scores are important in your early 20s because they help rental agencies decide if you’re a good candidate for renting. Your credit score will also be used to help determine your eligibility for car loans and mortgages. Good credit scores mean higher acceptance and lower interest rates. In your early twenties, consider signing up for a credit card to build your history–maintain a low balance and make regular payments to get and keep your score up.

In your twenties, you should begin saving money every month. Having an emergency fund is crucial, so you’ll want to put aside at least a few thousand dollars while your expenses are relatively low. When emergency situations occur, people  tend to accrue a lot of credit card debt. Mitigate this by saving money now–think 10% of every paycheck.

You’ll also have to begin paying off your student loans now. If you’re lucky, you’ve been able to keep your debt low. Others have thousands upon thousands of dollars in student loan debt Assuming you were able to find a job, you should begin regularly paying student loans. A loan counselor can help you organize your loans and get them paid sooner. You might also consider pursuing loan forgiveness options.

Your twenties are a great time to think about real estate investing too. If financial independence is your goal, think about purchasing a home to use for rental purposes. You might not even have to manage it–property managers are relatively inexpensive and make the process of building wealth so simple. It’s important, even in your twenties, to ask your money to work for you, and real estate investment is a great way to make that happen.

Finally, focus your twenties on becoming financially independent. While many twenty somethings rely on their parents, make it your goal to stop. Your financial independence will give your parents the gift of earlier retirement and will make you solely responsible for your actions–something that can actually be very freeing.

In your 30s

In your 30s, it will be time to start thinking more seriously about saving for marriage and children (though this may happen earlier, depending upon your timeline). Your budget will change depending upon your decisions, so its best to begin saving as soon as you can. To make the most of planning, make sure your emergency fund covers additional people, you’ve got a steady and secure income, and you have a growing savings account.

In your thirties, you can also make it a goal to have paid off all of your non house related debt. This includes student loans, credit cards, vehicles, and so on. If you focus on repayment, you’ll have more money to put toward retirement, etc. Study options for decreasing the time it takes to pay things down–or do it right in your twenties so you have few debts.

Your thirties are also a great time to build your investment portfolio to include a variety of properties in diverse areas. If you’re renting out a house in Austin and one in Atlanta, you’re protecting yourself. Should one market suffer, you’ve got another. And, if you’ve done your research, market fluctuations won’t affect you–you own real estate in areas that make a lot of sense.

And, because low interest mortgage debt is good debt, you don’t have to stress out about paying it off. By collecting rent, you’re making money that will help you later in life–and you aren’t doing it in a risky way.In your thirties, you should consider increasing the amount in your emergency fund. Instead of putting a few thousand dollars aside, set aside enough money to cover expenses for six months. This can be a lifesaver in times of illness or disability, life changes, etc. Set your goal in accordance with your income and expenses.

In your thirties, you’ll also want to begin thinking about retirement. Build your savings so that you can live comfortably once you reach the age at which you’d like (or are able) to require. Allot 15% of your paycheck toward retirement and plan on living another 20 to 30 years–at minimum. Many companies offer a 401K, though you may also begin your own IRA. Start in your early 30s to ensure that your retirement is both timely and comfortable.

In your 40s

Financial goals in your forties will focus on  looking toward the future. Think more seriously about life insurance, and invest in a policy that will cover your funeral costs if something happens. Make sure your spouse and children have access to all of your assets, should the unthinkable happen.

While you should invest as soon as you are able, make sure that you’ve got a few solid investments in your forties. Your portfolio should reflect the money you hope to make once you’ve retired and it should also solidify the assets you hope to pass on. Jason Hartman offers a ton of good advice about investments–but look for things that aren’t gambles.

If you’ve followed our instructions, your credit card balances should be low. But go ahead and pay them off if you havn’t already. Free up your income by paying off balances and keep your credit score looking great.

Now is the time to get rid of real estate investments in poor areas that just aren’t paying off. It’s okay–mistakes happen. But it’s time to rid yourself of your less than stellar choices and make sure your houses are in areas that make a lot of sense.

In your 50s

Welcome to your 50s! You’ve made it this far financially, and you should be in good shape for a fabulous retirement. Now, you’ll need to step it up for a final push. Begin putting the maximum amount allowed toward your Roth IRA and your 401k.

Spend some time looking at the retirement portfolio you’ve established–even hire a financial planner. Focus on making your money work for you–and get rid of risky investments.

How’s your real estate doing? If you’re satisfied, now may be the time to relax and collect your money. If you’re interested in pursuing more investments, your 50s can be a great time to explore new areas or different kinds of homes.In your fifties, you’ll want to pay off your mortgage if possible so that you’ve got less to worry about during retirement.

In your 60s

You have finally made it! If you aren’t yet retired, its just around the corner. Make sure that you’ve now saved enough money to make retirement a possibility–and make a budget. Stick to a savings plan you’ve established and kiss work goodbye!

If you want, sell assets you will no longer need to help reach your retirement savings goals and plan your estate. Get a will in place and utilize trusts if you need to.

Because you’ve played it smart by investing in the real estate game, your retirement will not be without a source of income. By now, you may have eight, nine, ten properties–all collecting rent for you. There will always be renters. That doesn’t change now.

With some careful life planning, you can reach retirement freely and with ease–set some goals and follow them–60 is just around the corner!

 (photo credit: ancient history via photopin cc)

Read more from Young Wealth: 

Modern Love: Unmarried and Buying a House

Finding a Career in Finance

The Young Wealth Team