No matter your age, it’s never too late (or too early) to make smart financial decisions. There are, however, prime times to make certain money moves and investments. Take for instance a 401(k) or equivalent retirement account. The sooner you start contributing, the more you’ll have once you reach retirement. And then there’s the obvious: staying away from credit card debt and buying items you can actually afford a down payment on.
According to the 2021 U.S. Census Bureau, 59% of Americans have access to some type of 401(k). Surprisingly, only 32% of that same population invests in one. And according to CareerBuilder, 78% of full-time workers report living paycheck to paycheck. Even 10% of individuals who make $100,000 or more report not being able to make ends meet.
Moral of the story: Having good financial health and receiving practical advice can do wonders for you and your money journey, no matter the size of your paycheck.
We did the digging for you and found some of the best money advice for each decade.
20s: Start contributing to a retirement account
When you’re in your 20s, it’s most likely the first time in your life you’ve had a full-time job with benefits, not to mention a sizable paycheck (hopefully). With your newfound income, it’s the ideal time to start good money habits. These initial habits can either set you up or tear you down in terms of future financial success. A good way to start is by contributing to a retirement account, such as a 401(k).
These days, most companies provide a 401(k) or equivalent to full-time employees. Being semi-new to the workforce, it can be easy to gloss over this benefit in your 20s because retirement seems so far away. Plus, it’s more money taken out of your paycheck that you probably need for student loans.
“Even if you have student loans, you should be saving for retirement,” says Julie Sandler, vice president of sales at Paradigm Trends.
Additionally, contributing to a retirement account will eventually help you actually retire. And if you’re smart and start investing now, you’ll be able to retire well.
“Whether you have access to a 401(k) at work or an IRA, start saving something early,” says Sandler. “If you have a company match, you should start to save at least up until the point that you get the full match because that’s just kind of free money. For anyone in your 20s, if you’re not thinking about retirement, it can set you up for life.”
In addition to starting contributing to retirement, Sandler recommends paying bills on time so as to not ding your credit score. This is also the age where it’s advised to not fall into credit card debt, i.e. if you can’t afford it, don’t buy it.
30s: Max out your retirement
When you enter your 30s, it’s an ideal time to max out on your retirement, which means you’re contributing the most the government allows you to contribute to your retirement accounts.
“Every year, the government puts out the retirement contributions,” Sandler says. “Make sure you’re maxing out your 401(k) or IRA, whatever it is. Now is that time when you want to start thinking about where you’re actually putting your money.”
If you find yourself with a surplus of money every month, even after contributing to retirement, it’s a good idea to start investing your money if you don’t immediately need it.
“Your money is going to become less valuable if it’s sitting in cash,” she says. “So, if you have extra money that you do not immediately need, you should start thinking about opening an investment account so at least the money is accruing some kind of gain or interest.
Another big investment that commonly happens in your 30s is purchasing a home, or you at least start exploring the idea of purchasing a home. The average homebuyer is 45 years old, and a quarter of homeowners are in their 30s, with that number rising every year. If you happen to be part of that statistic and looking for a home, Sandler recommends making a financial plan for it.
“Most people spend first and then save what’s left,” she says. “That is oftentimes a recipe for not ever saving money. So, as simple as it sounds, if you save first and then spend, you will be much more successful.”
40s: Get your debt under control
If you’ve reached your 40s and still have sizable debt, now’s the decade to get it under control.
There are two types of debt — good debt and bad debt. Student loans and a mortgage would fall under good debt because it doesn’t really count against you and the interest rates tend to be low. On the flip side, bad debt is anything that you can’t afford that has a higher interest rate, such as buying an expensive car that’s completely out of your price range.
“You want to really be paying down your debt,” Sandler says. “You want to meet with a financial advisor if you don’t already have one. It’s a good time to put yourself on a financial plan. There are formulas to make sure you are on track to show how much you want to have in your retirement account when you retire.”
If you do find yourself off track of your money saving goals, working with a professional, such as a financial advisors, can help you get back on track.
50s: Meet with a financial advisor
If you haven’t already met with a financial advisor, now’s the time to do so. Financial advisors access individual financial needs and assist with investment decisions. They can also help their clients plan for both short- and long-term money goals.
“If you’re off track, working with a professional can help you get on track,” Sandler says. “It really should be a priority because life just kind of speeds up. If you’re behind, and the vast majority of Americans are, you need to find ways to put yourself on track to have a better peace of mind going into your retirement years.”
Meeting with a financial advisor helps ensure you’re on the right track to retirement and you’ve set yourself up for success money-wise. However, only 30% of advisors utilize these advisors and their services.
60s: Figure out how much money you’ll have access to
Many people retire in their 60s. As you’re approaching your retirement years, it’s absolutely critical to figure out how much money you have and how much money you’ll have access to once you enter retirement. And by “how much money you’ll have,” that includes not only your retirement accounts, but also the value of your whole estate.
“You need to have a net worth statement to understand where your cash is, where your assets are, where your liabilities are,” Sandler says. “So, you want to understand your net worth and understand where your money is coming from.”
So, money is generally going to come from your retirement savings or a pension, if you even have one because it’s so uncommon these days. Additionally, you’ll have to figure out how much you’re going to get from Social Security.
“We have a whole variety of things to help you figure out how you’re going to live,” she says. “Now, your retirement account basically becomes like your paycheck.”
70s+: Make sure your retirement money is invested properly
So, you’re now enjoying retirement, the phase of life you’ve been (hopefully) saving for since your 20s. Your retirement account acts as a paycheck, so it’s an ideal time to make sure that that money is invested properly. During this time, it’s also smart to figure out what your expected cost of living is going to be.
“As long as you don’t take out 3 -5% of your retirement account per year, your retirement money is going to last,” Sandler says. “Hopefully your whole lifetime if it is invested properly. So, you’re basically living off earnings. And then the principle of your retirement account is there for emergencies or vacations or if you need to help out, say, your kids or grandkids. It’s there for other things.”
Now is also a good idea to live within your means and truly stick to your budget. It also wouldn’t hurt to meet with a financial advisor to make sure everything looks good monetarily.