Money Matters
Saving money is one of those things that everyone agrees is important and almost nobody feels they are doing well enough. The habits that set you up in your twenties are not the same ones that protect you in your forties, and both are different from what matters most as retirement approaches. Here is a straightforward guide to each stage. Early adulthood: 18 to 35: The single most valuable thing you can do in early adulthood is start. Even small amounts saved consistently, early, grow into something significant over time thanks to compound interest. If your employer offers a 401(k) match, contribute at least enough to claim the full match. That is free money, and walking away from it is one of the most common and costly financial mistakes young adults make. Beyond retirement savings, focus on building an emergency fund. Six months of essential expenses in a savings account you do not touch gives you the flexibility to handle a job loss or unexpected bill without going into debt. At this stage, avoiding high- interest debt matters more than almost anything else. Middle adulthood: 35 to 55: By midlife, the financial picture gets more complicated. Mortgages, children, aging parents and career changes can all pull
at the same budget simultaneously. The priority here is eliminating high-interest debt, increasing retirement contributions, and reviewing insurance coverage to make sure it reflects your actual situation. This is also the right time to automate. Set up automatic transfers to savings and retirement accounts so the money moves before you have the chance to spend it. Review your subscriptions, recurring expenses and utility costs once a year, cutting out unnecessary spending. Later adulthood: 55 to 64: As retirement comes into view, the focus shifts from accumulation to protection. Maximizing retirement contributions is important. From age 50, the IRS allows catch-up contributions to 401(k) and IRA accounts, which can make a meaningful difference to your final balance. Work with a financial advisor if you have not already to understand Social Security timing, healthcare costs and withdrawal strategies before you retire is far less stressful than working it out after. Cutting unnecessary expenses at this stage also pays double. Every dollar you do not spend is a dollar that stays invested and keeps growing. That is a different kind of earning. Wherever you are in this picture, the best time to start was yesterday. The second best time is today.
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Estrella Publishing - The Front Porch magazine
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