From Young Adulthood to Midlife: Smart Financial Decisions You Can’t Ignore as You Age

You technically reach adulthood when you reach the age of 18. However, you’re also still a teenager at this stage, and it’s common to still be a little reckless during these years, especially when it comes to money.

There comes a time, though, when smarter financial decisions aren’t just sensible but necessary for you to live a comfortable life. In this guide, discover the types of financial choices you should make from young adulthood to midlife.

In Your 20s

In your 20s, you are a young adult. You are moving through various stages of life, going from being a very young person who relies on their parents more to a more independent individual with a career. As such, there are some big financial decisions you must make.

• Managing debt: A big part of that involves getting debt under control. You may have racked up a lot of debt in your youth, perhaps to fund vacations, to buy a car, or to get you through school. Now, it’s time to create an action plan to overcome it. If you have a lot of debt, seeking out a debt relief company like Achieve can help. Their debt consolidation loans are a standout, as it means unifying all of your debts into a single payment. Pay this off each month for the length of the custom plan, and you’ll finally be free from your debts and able to take on adulthood with more financial freedom.

• Building a small emergency fund: You don’t need to have thousands and thousands of dollars put away when you are in your 20s. However, building a reasonable emergency fund is always a good idea. Start small by saving something like $50 a month. After a year, you’ll then have $600 stored away.

• Learning to budget: You can learn how to budget in your 20s, which will then shape how you manage your money for the rest of your life. Start by tracking your cash flow, which essentially means seeing exactly where your money is going (it’s amazing how much you may not keep track of!). You can even use a simple budgeting app to do this for you. From there, you can cut back on unnecessary subscriptions and whatever else is draining your bank balance.

• Early pension contributions: If you start contributing to your pension in your 20s, you’ll be in a much healthier financial situation when you retire. This is because you’ll take advantage of compounding interest. Workplace matching is a great idea, as it’s essentially free money from your employer.

• Spending money to have fun: Of course, don’t forget to have fun in your 20s! You have your youth still with you, which means you can enjoy things like traveling and adventuring. Don’t hesitate to spend money on making memories while you don’t have as many responsibilities.

In Your 30s

Your 30s are often when you become more sensible with your finances. You may start a family during this time, for example, and begin thinking more seriously about retirement and future planning.

• Starting to invest: One big change many people make when heading into their 30s is deciding to invest. That’s not to say it can’t happen in your 20s, but more people care about investments as they get older. It involves diversifying funds in stocks, as well as utilizing tax-advantaged bank accounts like a Roth IRA.

• Getting insurance: People in their 30s are more likely to think about insurance. This is sensible, as you don’t know what’s around the corner. Of course, there are many different types of insurance for various situations. Life insurance is good if you have a family, for example. Income protection is also useful to help keep your wages coming in if you experience something like an injury that prevents you from working.

• Budgeting more rigorously: It’s a good idea to budget more rigorously in your 30s. Be more strategic about where your money goes, ensuring that you have enough for your needs and savings.

In Your 40s

You start entering midlife when you enter your 40s. It’s a great time for many people, as it often brings peak earnings and greater stability at home. At this stage, it’s more about accelerating savings and protecting what you already have.

• Drafting a will and setting up beneficiaries: At this stage, it’s a good idea to draft a will, as you never know what might happen. This will coincide with setting up beneficiaries to ensure your family’s estate is protected.

• Supporting older children: If you have had kids, they will likely be a bit older by now. You might start to think about funding their education or setting up savings, so they have a cushion when they come of age.

• Being more tax efficient: People in their 40s often think more carefully about tax efficiency to minimize how much they have to pay. It’s a good idea to meet up with a tax consultant for professional and expert advice.

Beyond 50

50 is when you are comfortably in your midlife.

At this stage, you will want to diversify your wealth to earn more. That might include looking beyond the basic workplace retirement plan you have in place and also opening up a dedicated account to start contributing your own money aside from that to build more wealth. At this stage, it’s important to have life insurance and estate planning firmly in place.

Many people at this stage also think about adjusting their lifestyle for when they retire. The kids may have flown the nest, so downsizing makes sense, as it means saving money and not having a large space to clean as you get older.

Remember: Financial Planning Doesn’t Have to Wait

Whether you are 20, 30, 40, 50, or 65, you don’t have to wait to make more sensible financial decisions. You have the chance to make choices now that will impact your future life. By investing in life insurance, getting your debts under control, drafting a will, and budgeting properly, you will make your future life that much easier. Of course, don’t forget to live a little, too. It’s not just in your 20s that you should enjoy the adventures that life has to offer! Many people do not regret spending money on amazing memories, after all.