Financial Milestones for Every Age

21 de noviembre de 2024

by Christian Phillips

In life, just like racing, there are milestones that you can reference to check in with yourself to see how you're pacing toward your ultimate goal. While financial success looks different for everyone, financial experts align on a few key markers to indicate you're pacing toward those goals in a healthy way. As you journey through your 30s, 40s, or even 50s, here are some essential considerations that will set you on the path toward your goals.

1.) Consistently Plan for Unexpected Emergencies
It's generally accepted that your emergency fund should be able to cover 3 to 6 months of expenses. These savings can help you handle situations of possible unemployment, home or car repairs, medical expenses, or any other financial emergency that may arise.

The costs of housing, vehicles, medical care, and groceries have steadily risen over the years. This has made saving increasingly difficult due to restricted budgets across the nation. An achievable goal for someone in their 20s is to save $1,000 within the year's first six months. While this goal may be easier for some, starting small and gradually increasing your contributions is fine.

People in their 30s and 40s often face increasing responsibilities, such as raising a family, managing housing costs, covering educational expenses, and caring for aging parents. Your emergency savings should be funded in line with those increases.

2.) Try to Limit High-Interest Debt
Whether you are in your 30s, 40s, or 50s, it's important to avoid high-interest debt. Credit cards are a common source of high-interest debt. If you are currently free from high-interest credit card debt, that is a significant accomplishment worth celebrating.

As you review your debts, identify those with an interest rate of 5 percent or higher. By prioritizing their repayment, you'll free up more of your finances for other financial goals.

3.) Start Saving for the Future
As soon as you have the opportunity, it's important to start contributing to a 401(k), Roth IRA, or another retirement account as early and frequently as possible.

When you first begin contributing to your 401(k), aim to allocate about 1 to 3 percent of your income, especially whenever you receive a salary increase. Continue to increase your contributions until you save between 12 and 15 percent of your income for retirement.

When you work with a financial advisor, they can help you project how much you will have at your desired retirement age and make recommendations for how you might adjust your contributions to meet your goals.

4.) Get Your Affairs in Order
As you approach your desired retirement age, it's essential to have a plan in place. Check if your employer offers health, life, or disability insurance. Protecting your loved ones and ensuring they are cared for if something happens to you is important.

Here are some key things to consider when creating your plan:

Write a Will: Clearly outline how you want your assets to be distributed. If this step is not done correctly, your wishes may not be honored, and your assets could be distributed according to state law.
Indicate Beneficiaries: Name beneficiaries on your 401(k), IRA, HSA, and life insurance policies.
Review Bank Accounts and Assets: Ensure that these accounts and assets are titled correctly so the right people can access them seamlessly when you pass away.

Again, working with a financial advisor can help you navigate these key steps.

Continue Your Journey!
As you navigate the financial milestones that mark each stage of life, remember that achieving financial success is a personal journey, not just a race. By regularly reassessing your goals and making adjustments when needed, you'll be better equipped to handle life's financial challenges. Whether you're building an emergency fund, saving for retirement, or exploring investment opportunities, each step brings you closer to a stable and fulfilling financial future. Stay consistent, seek guidance when necessary, and celebrate your progress along the way.

Financial Milestones for Every Age

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