One of the most common goals for most Americans is a comfy lifestyle from our first steps into the workforce all the way through to our golden years. It’s a wonderful idea, but for most it doesn’t happen without a lot of hard work and planning. Let’s take a stroll through the decades and look at some things that should help.
Here are Five Fast Decades of building wealth throughout your life:
- ⚡ Roaring 20s - When we’re young, we hit the workforce with energy in our first chance to make some REAL money! With all that new cash, we should build a reserve fund for adulty things like car repairs, appliances that keel over in the night, or a sudden job loss (not that that would ever happen, right?). Six months of income should do it. And start saving for the future NOW, if you can. Time is your friend, so if you start now you’re far more likely to make your 60s super sweet! If you’re married and planning to have one parent stay home with the kids, then build your life around one salary rather than two. I know, I know, but you’ll thank yourself later.
- 💨 Accelerating 30s - You’ve hit your stride, you’ve advanced a bit, and your income is growing. Great…just don’t let your spending increase faster! Now is the time to aggressively start saving for both your own retirement and your kids’ college if you can. Shoot for 10% of your income each month. If you haven’t begun investing, now is a great time to do that, too, and go aggressive to make full use of the decades you have in front of you. You’re making good money now, but putting it to work long term is the best way to have more later! And think about buying a house, one of the best ways to securely build wealth.
- 📈 Rockin’ 40s - This is probably your sweet spot for income (and also being busy!). You may have kids at this point, so it’s definitely time to start saving for college. If you haven’t started on retirement funds yet (or haven’t been able to), now’s the time - try to carve out 15-20% each month to catch up! And talk to your parents about their plans, too. It can be really expensive to take care of an aging parent along with your own kids!
- 💰 Rollin’ 50s - You’re now on the back side of your career. You’re probably still making good money, but you don’t have that many years of high income left. You can make catch-up contributions to your retirement (definitely work with your financial planner here), but it’s time to start getting organized for retirement! Shift your investments to be more conservative because you don’t have time to recover from market drops, and figure out what you’re doing with your assets. And maybe pick up a side gig or two, just to keep some income rolling after you’re officially off the market.
- 📉 Sweet 60s - You have arrived! Maybe. Even if you’re still working, odds are good that your income has dropped a bunch, or will very soon. It’s time to take an honest look at what you’ve got coming in and how well it’s going to support the lifestyle you want.
🔥Bottom line: Life will always throw a few curveballs your way. But, if you make good choices and plan ahead with suggestions like these, you should be able to handle them even if it’s painful here and there. Then you’ll hopefully be able to ride off into the proverbial sunset!
What’s the best financial planning advice you’ve ever heard?
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