As we begin each new stage of life our priorities start to change. In that same manner, our financial priorities should change to fit ultimate goals that we have for our life. Here are four key milestones to aim at accomplishing for ages 30, 40, and 50. Starting the course with your financial goals now helps you have a greater chance of having financial freedom with your finances later in life.
Goals by Age 30
Goal One: Become financially independent from your parents. By 30 aim to have your own place to live while also paying your own car and medical bills (all of your bills). Being able to completely support yourself is one of the first big financial goals. Welcome to the world of true adulting.
Goal Two: Focus on tackling your student loans and any outstanding debt from your younger years. While it may feel nice to allow student loans to sit in deferment-remember, the longer it sleeps there the greater the cost. Trying to start a family with your own preexisting debt can become an overwhelming burden.
Goal Three: Have six months or one year’s worth of your salary banked. This seems ambitious but you should aim to have some contributions going toward your savings and retirement before you skip over into your 30s. Give it a try.
Goal Four: Start saving money to pay for vacations in cash. You can create a separate bank account or even use an envelope method to start putting money to the side for excursions. This helps you avoid using credit cards and overspending on vacations. Paying for your vacations in cash leads to a stress-free vacation.
Goals by Age 40
Goal One: Start considering or revisit the life insurance that you have in place. Is it enough to care for your family in the case of unexpected events? When you were in your 20’s or 30’s you may have purchased the insurance that was the least expensive. Review the details of your coverage carefully and measure it to your current lifestyle.
Goal Two: Continue to build up your cash reserves and have an account for planned future expenses (home makeovers, a new furnace, washer/dryer etc). The last thing that you would want to do is dip into your retirement fund for residential repairs.
Goal Three: Max out your 401k plan. Now is the time to take the best use of your employer benefits. If you are unable to max out I urge you to step it up a notch by 1-2%.
Goal Four: Reduce or payoff debt. Low overhead. Low overhead. Low overhead. You’ll thank yourself later for this.
Goals by Age 50
Goal One: While you are in your 40s, this is a good time to finish paying off your mortgage before retirement. Not having a mortgage is one less expense and more money to contribute to your savings. Time moves extremely fast.
Goal Two: Adjust insurance accordingly. Pay close attention to this.
Goal Three: If you choose to have a will, update it or start preparing it. A will is a legal document that coordinates the distribution of your assets at death. Remove the thought process of, “I don’t have anything to leave anyone.” Your assets could range from insurance policies, to vehicles you own, clothes, jewelry and more.
Goal Four: Progressively increase the amount of your earnings that are allocated to your savings. As your expenses become more intentional, begin adding more money to your savings. For example, if you currently give 10 percent of your income to your savings, next year go up to 15 or 20 percent.
Use these milestone tips to help gauge your financial goals for the future.