Achieving financial wellness looks different for every person, every age and every stage. Read on for a few key financial milestones to keep front-of-mind as your life, your finances and your money goals mature.
Want to give a huge boost to your future financial health? Become a budgeting expert in your twenties. When you know how to monitor income and expenses, plus stick to a spending plan, you’ll be in a fantastic position to handle debt, savings, retirement and more as the years go by. This is also a good time to learn about credit and build your credit score. Having a strong credit score affects your ability to qualify for loans, buy a home, and get the best deals on a variety of financial products. Learn more about credit on the Harvard FCU blog, including what your credit score range actually means.
Being in your thirties often means a higher salary and more steady income stream. Remember: more money doesn’t have to mean more spending! Instead, use this time to get serious about saving. If you’re saving for a house, consider a high-interest savings account that keeps money accessible but offers a good rate of return. An Individual Retirement Fund (IRA) is one of the best ways to start saving for retirement while gaining tax advantages. And, if you don’t yet have an emergency fund, make a goal to save three to six months worth of living expenses in an account earmarked for unplanned expenses.
Researchers estimate that people aged 40-55 have the most debt out of any other age group. The sources of this debt include credit cards, auto loans, mortgages and student loans. While borrowing money is an important aspect of overall financial health, holding onto high-interest debt—in particular, credit card debt or debt from predatory personal loans—can have a significant negative impact on your finances. Check out debt repayment strategies on the Harvard FCU blog, and take advantage of debt counseling which is offered at no cost to Harvard FCU members through GreenPath Financial Wellness.
Estate planning means making an advance plan about what will happen to your assets after your death. Many people start building their estate plan as soon as they have children, while others wait a bit longer. Whatever position you’re in, it’s always a good idea to regularly review your estate plan and make adjustments. A digital estate planning tool can assist in the process of updating documents and directives—such as your will, medical directive, life insurance policy and so on. Click here for more information on the steps involved in estate planning.
A number of changes often accompany this life stage. Some people are looking at retirement, others may be considering a move to be closer to grandchildren, still others may be ready to hit the road and start traveling. As your lifestyle evolves, be sure to stay current on finances. Budgeting, saving and investing for the future are still important! This is also a time to be extra-vigilant about financial fraud. Scammers prey on their victims’ fear and entice victims to act fast. Don’t speak with strangers via email, text message or phone calls. It’s always a good idea to end the communicate immediately, then call back your bank or credit union at their official phone number which you can find on a recent bill.
After age sixty-five, most people are leaving their nine-to-five job behind and tapping into other sources of income: whether that’s a 401(k) plan through an employer, an Individual Retirement Account (IRA), social security or another type of pension plan. At this point, it’s a smart idea to design an asset withdrawal strategy. Know your full retirement age for Social Security, and consider using other sources of income rather than tapping into your Social Security benefits early. As for investment accounts, make sure your asset mix matches your risk tolerance, which typically changes following retirement. Some people at this stage also invest in long-term care insurance to prepare for healthcare expenses later in life.