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Planning Your Financial Future
A look at what your healthy money habits should be at each age and financial goals to complete every decade.

by Lauren Kubiak

We’ve all heard the metaphor that life is a marathon, but in the case of finances, there’s nothing more comparable. Preparation is key to getting to the finish line, and once the race starts, it’s important to keep a steady pace. The same goes for your finances—from beginning to end there are important steps you should take in order to have successful savings, investments and a retirement plan. Having a financial road map to plan out savings and other funds will get you through the big moments in life, whether it’s the loss of a job or buying a new home. 

Financial Goals: 20s

IT’S THE START OF A LONG FINANCIAL JOURNEY by the time you hit your 20s, and it’s the most important time to be proactive with finances. T his age encompasses getting a footing in a career, which involves more financial obligations, but it’s a valuable start to your financial journey to adjust it in the way you need.

Emergency Funds
A fund you always want to have at your disposal is an emergency fund. As early as possible, you want to begin depositing anywhere from 5 to 15 percent of your check into a savings account. This can be used at several different points in your life including if the loss of a job were to occur. “You really need at least three to six months of your  salary/income available in case something happens, whether you get laid off or whatever the reason would be,” says Stan Molotsky, presi dent and CEO of SHM Financial Group. 

Make Investments
Molotsky says there’s no better return over time than the stock market and suggests  investing as soon as possible since the younger you are the less you have to lose. “If you’re 25, 30 years old you figure … [you’re] using this as an opportunity to buy more for later on. If you’re 70 and the market drops 30 percent and you have all your money in the m arket, that’s the problem,” he says. “You have to make adjustments as you go along to adjust what you’re doing based on one’s risk tolerance. How much risk I can really take and what is this money really for and when am I going to need it?”

Begin Retirement Fund
It can never be too early to begin your retirement fund. “People can’t rely on [Social Security] for their retirement,” Molotsky says. “It’s a nice supplement, but it’s not going to pay for all the things [people] want it to pay for when they do retire.” You want to take advantage  of your company’s retirement plan— a 401(k) or 403(b)—as soon as possible. 

Financial Goals: 30s

BY THE TIME YOU HIT YOUR 30S you could be thinking about getting married, buying  a home and having children. These encompass huge financial strides and having that savings from your 20s shows where you can go in your 30s and beyond.  

Rid Student Debt  
For those who have it, the debt can linger on for a large portion of your life. Paying more each month lends more dollars toward the principal and can reduce a number of payments and astronomical interest costs by years. After all, eliminating that student debt opens up more doors for other financial opportunities. 

Double your Income in Savings
Now that you’re set in a career and have been saving for a decade, it’s time to focus on where that money is going to be used. “Once you’re in the habit of saving, it’s easy to shift gears as to what you’re saving for whether you’re saving to buy that firs t house or whether you’re saving to furnish it, then you’re saving for [your child’s] college and then you’re saving for retirement,” Molotsky says. “But that extra amount should go in. You get a raise, that raise should go right into the savings account that you have.”

Kids’ College Plan  
You shouldn’t wait until the last minute, or until your child is on the verge of going to college or into a trade, to  begin thinking about funds. “There are saving vehicles available for college which are called 529 plans which allow you to put money into  these plans,” Molotsky says. “There’s no tax on that money, on the profits over a period of time.”

Additional sourcing from The Balance  

Financial Goals: 40s

WHETHER YOU’VE DIPPED INTO YOUR SAVINGS for a house remodel or a medical emergency, you should sti ll be in the “saving mindset” and looking more into your financial future regarding retirement and estate planning.

Establish an Estate Plan
Estate planning is making sure your affairs are in place, whether that be through a living will or a health care proxy, and an estate plan is usually established once people begin accumulating possessions or have a family. “It’s about  making sure there’s no burden on family and loved ones in the event that things are not prepared for in advance,” says Jeffrey Kerstetter, solo practitioner at Kerstetter Law. “It’s about making sure things go the way you would like them to go, and it is about making sure that there is no burden on those who  remain or who are called upon to manage your affairs.”

Max Out Retirement
You want your retirement to be at its best. Your savings should  be going toward retirement first before anything else. “Whether you’re saving through work through the 401(k) or 403(b) or your regular I RA account, that becomes your ‘focusing in on’ and taking money and putting it aside,” Molotsky says.  

Get Ahead on your Mortgage
At this point, you also want to have all non-mortgage consumer debt (car loans, credit card loans, etc.) paid off, leaving debt a notion of the past. Once that is all said and done, it’s the perfect time to begin paying extra on the mortgage. As long as you’re maxed out on your retirement and have education funding locked in, any extra dollar should go right to the mortgage payment. 

Financial Goals: 50s

YOUR SAVINGS HAS BEEN BUILDING UP for the big finale: retirement. In your 50s you should be acknowledging your retirement goals and reaching those goals whether it’s moving to a new location or looking into long-term life insurance.  

Closer to Retirement
The three years prior to retirement and three years post retirement are the most critical, and Molotsky suggests adjusting for minimal and conservative spending three years prior to prepare. “Our goal when we advise clients is to become more cautious [including] the first couple years into retirement so you get a hand on what you’re really spending and how you’re spending it and the fact that you’re probably going to be spending  a little bit more when you first retire than you will 10 years after you retire because of a variety of different factors,” he says.  

Assess your Will/Life Insurance
Now that you’re getting closer to retirement, you can review your will and life insurance plan to make sure everything is set in place the way you want it. It’s vital to get a head start on these since you want to have a will and long-term insurance set in stone before they are needed.

Published (and copyrighted) in Suburban Family Magazine, Volume 9, Issue 10 (December 2018).
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