Suggestions for Financial Goals at Various Life Stages
While there is no “one size fits all” plan for focusing on key financial areas, general guidelines may be helpful. We suggest the following areas that you may want to concentrate on, based on your life stage.
This is a time when you probably finish your formal education and begin your first “real” job. Now is the time to start developing sound financial habits for a lifetime.
- Establish credit and maintain a good payment record. Do not charge more than you can pay off in three months.
- Set up an emergency savings fund, typically three to six months of living expenses.
- Start learning about investing and establish an automatic savings program to reach your financial goals.
- If you can, buy a home, or start saving for the down payment.
- Take full advantage of a 401(k).
- Make sure you have adequate insurance (life, home or renter’s, auto, health, disability, liability).
Below are a few key financial areas someone in their30s and 40s might focus on.
- If you have children, begin investing for their education.
- Continue to keep credit under control and avoid paying finance charges and annual fees.
- Write a will or review the one you have.
- Review your insurance coverages in light of changes in your family situation, increasing assets, or professional activities.
- As your income grows, look for investments and savings plans that shelter some of it from taxes.
- Use a retirement planning software program or see a financial planner to figure out exactly how much you’ll need to have saved to maintain your lifestyle in retirement.
- Review your investment allocation to be sure you are still well diversified.
Below are a few financial goals for those nearing retirement or who are already retired.
- Review your will and estate plan.
- Pay off your debts. Depending on the going rates for different types of investments, it may or may not be wise to pay off your mortgage now.
- Maximize your savings for retirement.
- Make sure your growing assets are protected by liability insurance.
- As you near retirement, switch a portion of your investments to low risk types to produce income rather than higher-risk growth.
- With life expectancy increasing, make sure a portion of your retirement nest egg is invested so it continues to outpace inflation.
- Maintain your health and long-term care insurance.
- Remain wary of scams aimed at seniors.