Habits with Money Should Change as You Age: How to Manage Your Finances Throughout Life

How should you manage your finances throughout life?

Good question!

Financial education is abysmal throughout the United States which has resulted in a large number of Americans left in debt. Analyzing how much money can be earned with a certain degree seems to go out of the window when it comes to student loans. Far too many students put themselves far in debt for an education they could have received at a much lower rate. There is no shame in taking classes over the summer at a local college where credit hours are less expensive than a large state university. Going to a university out of state can double or triple the costs simply due to state of residence.

Financial habits need to change as we age whether it is spending, investing, or paying off debt. The last thing anybody wants is to mismanage their money which results in them having to go back to work after retirement. The following are tips for each age range of your life so you can make the best financial decisions for yourself.

20s and 30s

The beginning of your professional career should be dedicated to paying off debts. This could be for your home that you have a mortgage on your paying off nagging student loans which were mentioned above. The importance of starting to invest money early can allow you to retire years in advance. For those that are lucky enough to have a job that offers 401k match options, it is important to take full advantage of this. Think of this as free money which can help create a huge retirement account that will grow over time.

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• Using Real Estate To Make Money in 2020
• Coronavirus Family Budgeting 101: What It Is and How to Do it

The following are a few things to avoid in order to maintain financial wellness during this period of time:

• Do not spend above your means to maintain a certain lifestyle as it can take years to pay this off.
• Try to invest in your current vehicle in order to extend its lifetime. New cars are depreciating investments that need to be avoided when possible.
• Don’t get an apartment that you do not need as this can be a monthly drain on your finances. Not only do larger appointments have higher rental fees but the utility bills are usually higher as well.
• Do not live without a budget as you would be surprised where you are wasting money. Budgets are not just for people struggling as everyone can benefit from knowing where they are spending their money.

40s and 50s

Your 40s and 50s are going to contain far less stress financially if you made wise decisions when you were younger. Being able to pay off a mortgage or invest in an income property can be a part of this era of your life. Your investments during this period should start to be moved into more conservative options. You do not want a stock market crash to wipe out your accounts and cause you to extend your professional career. Sitting down with a financial advisor during this time is wise as they can create a plan that sets your retirement date.

60s and 70s

There are a number of people that work part-time in order to supplement the money they receive monthly from social security. Working with a living trust attorney during this period can be wise so a third party can manage your assets in case something happens. These types of trusts are frequently set up for young children by parents to ensure they are taken care of in case of disaster. Finding an attorney that specializes in this is going to be essential. Investing during this time should be done very conservatively as you only have a certain amount of money you will be earning.

Takeaways: Managing Your Finances Throughout Life

You are going to change your spending and investing habits throughout life. The changes could be due to need or experiences you have had in the past. Most people understand good financial habits but do not take action in order to put these habits into use. Be realistic about what you can afford at any point in your life and you will be happy you did so. Remember that nobody cares about the apartment you live in or car you drive if you do not have any money in the bank.

Take the time to list out ways that you could be spending in a more sensible way and investing money that is saved. You could find that you are not using your income to its fullest potential. Make a change for the better and over time savings will add up to amounts you never thought were possible.