Find out if you're on the right track with this guide from LearnVest that tells you the money and career tasks you need to do in each decade of your life.
For many of us, January is littered with a motley assortment of resolutions.
Instead of willing yourself to give up chocolate, while saving an extra $500 a month and finally learning Chinese, try whittling down the list to what really matters.
We've come up with some of the most important things that will keep you on track for a bright fiscal future. In other words, these are tasks that will set you up to have a great 2013 straight through to 2025.
And since our readers are all unique and in different life stages, we took the theme of "years" to a whole new level: Here are the top five things you should do in each decade of your life, from your 20s to your 60s and beyond.
5 Things to Do in Your 20s . . .
1. Build an Emergency Fund
When you're young, saving up for a huge financial safety net can feel daunting, but emergencies, like job loss, can also be daunting. We recommend that you save at least six months' net income in a high-yield savings account that's reserved just for true emergencies. Once you've saved that amount, you're done. So make it happen!
2. Pay Off Your Credit Card Debt
We know how easy it is to get into credit card debt, but make it a goal to be debt-free by the time you hit 30. Not only does credit card debt seriously weigh down your credit score, but it also compounds continuously, so it just builds and builds. Need help? Try LearnVest's Get Out of Debt Bootcamp.
3. Take the Job You Love
We don't want to make any assumptions about what your family structure looks like in your 20s, but if there's ever a time to follow your passion and take the job of your dreams, it's when you're young and don't yet have a ton of financial obligations. Will that make you feel financially insecure? That's why you need that emergency fund!
Read on for more.
4. Open an IRA
Although retirement may feel a long way off, time is your best ally. As a rule of thumb, imagine that you'll need at least 70 percent of your preretirement income per year (so if you make $75,000 before you retire, you'll want at least $52,500 per year of retirement). If you retire at 65, and live until 90, well, that's a lot of years.
Even if you can't contribute a lot while in your 20s, it's important to get started. Here's how to begin saving for retirement.
5. Take the Trip of Your Dreams
Even if you're struggling a little, don't lose sight of getting the most out of life. Rather than putting your dream trip on credit cards or begging your parents, save up and plan it out. If you have to wait a while before your dreams become reality, you'll enjoy it all the more when you do make it happen. (Like this 20-something who took her dream Paris vacation.)
5 Things to Do in Your 30s . . .
1. Become Confident in Investing
The idea is that, at a certain point, you'll learn enough about investing that you're confident in making your own investment decisions. That's not to say that you should start picking individual stocks — you shouldn't — but you should claim ownership over your own financial life. Want to get started? Learn the ins and outs of investing.
2. Get Life Insurance
The best time to get life insurance is when you're young and healthy, so you'll get the best rates possible. Of course, life insurance is even more important when you start having people in your life who depend on you, like children or a spouse who counts on your income. If you're a stay-at-home parent, this could also include a spouse who depends on your household contribution to be able to continue his or her own success at work.
3. Pay Off Student Loans
Student loans can haunt us for years after graduating, but it feels momentous when we finally pay them off. Don't have much of a plan for getting these off your back? Read our checklist for paying off student loans.
4. Max Out Retirement Contributions
We hope you opened an IRA and contributed some money while in your 20s, but now that you're a little more established, it's time to kick the "but I can't afford to max it out!" excuse once and for all. Funding your retirement isn't selfish — even if you have kids. In fact, being self-sufficient in retirement may actually be one of the greatest gifts that you can give your children down the line.
5. Give to Charity
We've heard it 1,000 times: "I would love to give to charity, but I'm not rich!" It's time to stop the excuses and give back to the best of your abilities. This can mean volunteering your time and skills or giving money.
5 Things to Do in Your 40s . . .
1. Open a 529
If you have kids, you can't open a 529 educational savings plan soon enough. And even if you don't have little ones, you can open a 529 for yourself if you plan to go back to school. Similar to retirement investing, your biggest ally when it comes to 529 investing: time for your money to grow. Here's what you need to know about 529s.
2. Do a Comprehensive Health Checkup
From getting a full annual physical to keeping up with mammograms, make sure to prioritize your health. (Here are the six doctor visits you should do regularly.) Health extends to more than just your physical body — take care of your spiritual side by going on a meditation retreat, if that's your sort of thing, or engage your mind through community classes and continuing education.
3. Mentor a Young Person
Once you've arrived at your career, help others do the same. Whether that means taking your intern out to lunch or becoming the official mentor of a young person in your field, put your experience to work!
4. Make a Will
Once you have a family, you should have a will. If you aren't married or don't have kids, make sure you've at least named beneficiaries on all of your financial accounts. If something should happen to you, your money will go to the people you love — rather than getting stuck in probate court. Here's when you can make a will on your own, and when you need to call in the experts.
5. Take Care of Your Parents
You probably have a lot on your own financial plate right now, but talk to your folks now to figure out whether they have sufficient savings for retirement — and what kind of help they're expecting from you. One of the simplest ways to make sure that you (and they) are protected is to invest in long-term care insurance, which will cover the costs of a nursing home, if it comes to that.
5 Things to Do in Your 50s . . .
1. Chart Your Course
As you look back on your illustrious career, also look back on any retirement plans you may have had at former jobs. When you're in your 50s, retirement should become something of a single-minded obsession. Consider consolidating your various 401(k)s and retirement plans to get a clear picture of how much you've built up.
2. Assess Your Retirement Income
Do you plan to keep working through retirement or will you have other sources of income, such as investments? Start by identifying these sources during retirement, and then take an honest look at some of the risks you could face. Do you understand how inflation will impact your retirement savings? Have you accounted for potential health care costs that could crop up in your later years?
3. Pay Off Your Mortgage
Depending on your other financial obligations in this decade of your life, see if you can free up additional funds to help kick your mortgage sooner rather than later, saving on the extra interest payments and easing your mind.
4. Invest in Your Home
Whether you want to increase your home's value on the market or simply enjoy where you live, take the time, effort and, yes, maybe even the money to make those improvements and upgrades you've always wanted.
5. Prepare Your Asset Allocation For Retirement
You're still a while away from retiring, but investing wisely is all about time horizons. If you're thinking of taking your retirement funds out within the next 10 to 20 years, you need to start tweaking your asset allocation accordingly. In other words, it's smart to invest in aggressive, risky things when you're younger, but when retirement is within sight, you'll want to segue to more conservative choices.
5 Things to Do in Your 60s and Beyond . . .
1. Look After Your Loved Ones
By the time you're in your 60s, you've likely amassed at least something of an estate to pass down to those you love. Of course, estate laws are complicated, and the last thing you want is to "bequeath" a good chunk of your estate to probate court or let it get gobbled up in needless taxes. By the time you hit your 60s — or preferably even before — consider meeting with a trusted lawyer or a financial adviser to plan ahead.
2. Create a New Budget For Postretirement Life
Whether or not you're still working, there's a good chance that you don't want to keep working forever. To gain a sense of how much you'll need to support yourself in retirement — and therefore how much more you need to save, and how long that'll take — figure out your future budget. (Of course, LearnVest can help you set up a smart budget.)
3. Cross Something Off Your Bucket List
Always wanted to go on an African safari? Watch the Yankees in Yankee Stadium. The time is ripe, so make it happen, whether that means saving up for a trip to the Sahara or signing up for cooking classes.
4. Review Your Social Security Benefits
With retirement within sight, gain a good, realistic understanding of what you can expect from the government. This will vary by your current age, how much you contributed over your lifetime, and the state of Social Security itself. You can then use that number to understand how much you'll need to dip into your retirement savings each month, and plan accordingly. Estimate your retirement benefits here.
5. Invest in Causes You Feel Strongly About
You're a passionate person. Use it to good effect by volunteering for causes and charities you love. Consider investing both your time and your money, if you're able.
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