No matter where you are in life, finances can be a big pain in the you-know-what. It doesn’t get easier, no matter how much older you get. So to help, we’ve devised a little road map of goals that everyone can follow to make sure they are meeting the right financial goals for their age. Of course, you can accomplish any of these goals sooner, but this is a good general map of where you should be at your 20’s, 30’s and 40’s.
When At Your 20’s…
Save Money Every Month: You’ll want to begin building your emergency fund. At a bare minimum, you’ll want a couple thousand in your fund to cover car repairs, unexpected doctor’s bills or other financial emergencies. Establishing an emergency fund now can help you avoid amassing major credit card debt in an emergency. Save at least 10 percent of every paycheck to build your emergency fund.
Begin Repaying Your Student Loans: Most 20-somethings leave college with thousands of rupees in student loan debt. Once you have a steady income, your first priority should be to get your student loans under control.
Become Financially Independent: Many 20-year-olds still rely on their parents’ help with financial issues. Work towards complete financial independence as soon as possible. That will free up your parents’ money for other things they need and want in retirement, give you a sense of pride in how you live your life, and ensure you’re free to live the way you want to.
If You Are At 30’s…
Allocate Income to Marriage and Children: If you are contemplating this life change, you’ll need to adjust your budget. Open a savings account to save for your dream wedding. You should also have sufficient emergency funds, a steady source of income and a budget that allocates most of your funds to things your house and children need before trying to get pregnant.
Pay Off All Non-mortgage Debt: By your 40th birthday, you should have gotten rid of all your student loan debt, credit card debt, car notes and any other debt besides your mortgage. Focusing on debt repayment now frees up your income so that you can use it more effectively as you get older.
Save Six Months’ Worth of Income: Put enough money in your emergency fund to cover six months’ worth of income so that if you or your spouse loses a job, has a serious medical problem or becomes disabled, you can still pay the bills. Base your savings goal on your current income and expenses.
Put at Least 15 Percent of Each Paycheck into Retirement Savings: Now is the time to start building up your retirement savings, so you will have enough money when you reach retirement age. Fifteen percent of each check should go toward retirement to let you retire and live comfortably in 20-30 years. You should start this at the beginning of your 30s; the longer you wait, the longer it will take to save enough money for retirement.
Invest With an Eye Toward the Future: Your retirement portfolio at this point should include investments that are expected to last you past the age of 90. Create a balanced retirement portfolio to give yourself a comfortable life in your golden years and leaves enough to pass on significant assets to your heirs.
Get Credit Card Debt Under Control: If you have kept revolving accounts open for their credit benefits, make sure you are paying off the balances in full every month in order to free up income and keep your credit score high.