What Your Money Should Focus on in Each Decade
I was contemplating what I wanted to write this week. To be honest, the past month has been tough. I’ve had a lot on my plate and then last week was sick with a nasty cold. The timing was horrendous. As I start to feel better, I’m trying to get myself re-organized and re-energized. Lately, I’ve been super distracted and unfocused in my work. I’m really hard on myself when I go through these unproductive spurts. We all go through periods like this: full days where we just want to stay in bed and hope our calendars are magically wiped clean. Often when I’m unfocused, it’s the result of not having a clear list of priorities and a lack of a plan of attack.
This got me thinking about how the American public has an unfocused and distracted view of their money. When we lack a clear goal and prioritized to-do list, our money issues are either ignored and/or grow worse. Our “distracted” money isn’t helping us reach our long-term goals.
We can’t be perfect every day, but I believe if we take a big picture approach and focus our money over the course of the long-term we can achieve some amazing results. So what should your money focus on in each decade of your life? Here’s a quick breakdown to help guide you to a more focused financial strategy:
In your 20s
Educate yourself and create a plan. Your twenties are for getting your footing in the adult world. It’s a confusing time best approached with an open mind ready to soak in as many lessons as possible. This must be your mindset when it comes to all things personal finance. Learn about your work’s retirement offerings and sign up. Open a Roth IRA and set up automatic contributions. Speak with a financial planner who can help you develop, not only a plan, but an understanding of your risk tolerance and capacity. Focus on paying down any student loans. The earlier you can eliminate your debt, the sooner you can focus on building your financial foundation. These small investments in your future and education will pay off in spades over the course of your life.
In your 30s
Maximize your saving and investing and begin to focus on the future. So you’ve been in the workforce for a decade and you’ve hopefully developed some good habits with your money and are advancing in your career. Now is the time to get serious about saving and investing in your future. Increase your contributions to your retirement plans as much as possible. Use separate savings accounts for different goals (i.e. house downpayment, vacation fund, kids college fund, emergency fund, etc.) Be sure you have enough insurance and have created a living will. Start to think about what you would want your golden years to look like. Yes, retirement might still be a long way off, but you’ll be glad you spent some time focusing on the future.
In your 40s
Maximize your earning potential. Continue to increase your savings and investing. In your 40s, you’re approaching your best earning years. Be sure your company is properly compensating you and that you are on-track with your financial plan. You’ll also want to focus on saving for your kids’ education, but never at the expense of your retirement savings. Use your money to make memories as well. We’re all getting older so put some money aside to enjoy right now.
In your 50s
Visualize what retirement is really going to look like. Focus on maintaining a healthy lifestyle. Everyone wants to retire, but if you ask people to explain what retirement is going to look like for them and how much it’ll cost, they have a difficult time verbalizing this. Map out what you want your future to look like and get serious about tracking your progress to your retirement goals.
In your 60s and beyond
Understand your estate planning needs and get your ducks in a row. Do this sa soon as possible, so it doesn’t weigh on you and you can enjoy your non-working years. Enjoy your retirement by getting a hobby, learning new things, and generally staying sharp. A good vision for your retirement will help you enjoy it to the max with your loved ones and friends.