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Today’s all about financial tips to help you make big gains in your 20s, 30s, and 40s!
Each decade is a little different.
You probably start your 20s in the negative: you owe money for student loans, an auto loan, and maybe credit card debt. And you’re not yet making much money. You need some financial tips to just survive!
By your 30s, you may (or may not!) be figuring things out. Maybe your financial tips are more about growth than just treading water.
And by your 40s, you could even have early retirement on the horizon! You need financial tips to help you manage your assets and investments.
Whether you’re in your 20s, 30s, or 40s, we have some killer financial tips for you!
Financial Tips for Your 20s
This is the decade to set yourself up for success by creating some good financial habits and automating your financial systems to fool-proof your financial plan.
It’s also the decade when you’re super broke.
So don’t be too hard on yourself if you struggle to see giant financial gains in your 20s. Focus on the systems, and the results will follow over the next several decades.
Here are our Top 10 Financial Tips for Your 20s.
1. Automate Your Finances
If you’re only going to take one financial step in your 20s, make it automation.
Automation just means you have money automatically transferred to different accounts in accordance with your financial plan. So you don’t have to think about your big-picture finances on a day-to-day basis. Your contributions to your emergency savings, dream savings, and retirement accounts are taken out of your bank account automatically every payday, so your financial plan literally can’t fail.
Learn how to automate today to guarantee your financial success!
2. Build an Emergency Fund
Emergencies happen. Your car breaks down, you get injured, you get laid off. These things are part of life.
And without an emergency fund, you’ll experience financial setback after financial setback. Which is miserable because these financial setbacks suck up the money you’d really rather use to achieve your dreams.
Get ahead of life’s inevitable emergencies by building your own emergency fund.
3. Live Below Your Means
Don’t spend more money than you make.
Duh, right? But people struggle with this every day. If you’re a natural spender, this might take some practice.
Start practicing while you’re young, and it will get easier. You’re building a great financial habit that will save you a world of hurt later in life.
4. Learn to Budget
I love budgets so much! They show you, in black and white, how much you can afford to spend. And that’s awesome because then you never have to feel guilty about buying something you love or feel anxious about paying your bills.
If you hate the idea of budgeting, try our Budget Calculator for Budget-Haters.
5. Build Good Credit
Did you know that having good credit saves you money?
And not like a couple hundred dollars…more like tens of thousands of dollars.
Building good credit is all about using credit often and responsibly. Use your credit cards, then pay the bill in full and on time every month. With every payment you make, you’re building a great credit score.
To learn more, check out 3 Ways to Build Perfect Credit from Scratch.
6. Develop Negotiation Skills
Negotiation skills are critical to financial success.
Some economists theorize that the average woman’s aversion to negotiation is one of the reasons women typically make less money than men for the same job.
Repeat after me: wages are negotiable.
You don’t have to accept the first offer. Most employers expect job candidates to counter-offer, so they purposely offer less than they’re willing to pay. That offer is just the starting point. Same with raises. Learn to ask for more now, and those gains will seriously add up over your career.
7. Start Investing for Retirement
Yes, you need to start saving for retirement in your 20s.
I know this is when you’re broke-est, but your money needs time to accumulate compound interest and grow.
Here’s the thing: social security may not even exist when we reach retirement age. And even if it does, it’s not going to pay enough for you to live on. You need to fend for yourself. And the easiest way to build a live-able nest egg is to start saving young. In The $831,751 Reason to Save for Retirement When You’re Young and Broke, we show you how to turn a lifetime savings of $220,000 into over 1.2 million dollars. But it only works if you start saving in your 20s.
Just take a look at how Aurora’s account grows like crazy because she starts young:
For a concrete plan of action for starting your retirement savings, check out 3 Easy Steps to the Retirement of Your Dreams.
8. Keep Your Debt Reasonable
I’m actually a big believer in the power of debt. For most of us, debt is the only way we can afford college, a reliable car, and a house.
The trick is to keep your debt reasonable and your interest rates as low as possible. If you need to take on a student loan because your chosen career requires a college degree, go for it! Just spend a little time shopping around for a lender with a low interest rate.
What you want to avoid is high-interest debt like credit card debt (if you can’t pay your balance in full every month, credit cards are a last resort).
And be smart with the rest of your debt. You probably don’t need a brand new car or a house you can barely afford.
9. Focus on Manageability, Not Perfection
Many 20-somethings are afraid of investing because they don’t know enough about it to execute an investment plan perfectly.
But honestly, neither do professional stock brokers. No one can predict the stock market with 100% certainty. So instead of aiming for perfection, create an investment plan that’s easy to manage.
10. Save BIG on Education
Wanna hear a secret?
You don’t have to get a Bachelor’s Degree to be a huge success. If your chosen career requires one, then of course, do what you need to do to get one. But there’s no reason to sink yourself tens of thousands of dollars in student loan debt for a degree you’ll never use.
You have other options.
First, consider community college. Seriously, I think everyone who wants a higher education of any kind should start with a community college. It’s an inexpensive way to learn, grow, and explore different majors.
Then, consider trade schools. There are tons of high-paying careers that require specialized knowledge you can learn from a trade school.
Need more tips? Check out How to Save BIG on College.
Tips for Your 30s
If you were money savvy in your 20s, it will start paying off big in your 30s. This is the decade to go after big income increases and start acquiring assets.
And if you haven’t built that foundation yet, now’s the time to do it! Focus on those Financial Tips for Your 20s that we just covered. Then tackle these tips for 30-somethings.
Here are our Top 10 Financial Tips for Your 30s.
1. Pay Down Your Debt
Debt is largely a matter of preference. I like leveraging debt for investments (which is why I’m currently over $800,000 in debt and totally fine with it), but many people aim to be debt-free.
What we can all agree on is that there’s no need for high-interest debt. If your interest rate is over 7% on any debt, you want to make that debt disappear as fast as possible. Our Champagne Waterfall Method can make that happen for you.
2. Consider a Student Loan Re-Fi
Refinancing for a lower interest rate on your student loans could save you a little money on your monthly payment and a small fortune over the long run.
Whether or not a student loan re-fi makes sense for you depends on the interest rates on your current loans, today’s market rates, and your credit score. If the interest rate on your student loans is over 6%, check out our guide to student loan refinancing.
3. Don’t Ignore Your Dreams!
So many 30-somethings get so caught up in paying the bills, paying down debt, and saving for retirement that they completely forget to fund their dreams.
That’s why everyone should have a dream fund. Your dream fund is money that you set aside every month (automatically of course) to make your dreams come true. Whether you want to travel the world, launch your own business, buy a home, start a non-profit, or send your kids to college, a dream fund will help you make that happen.
Start building your dream fund today!
4. Build Passive Income Streams
Want to make money in your sleep?
I know it sounds too good to be true, but passive income is legit, and money-savvy people make passive income every day! In fact, I just woke up to an email this morning showing that I made $97.50 over night through digital product sales!
Yes, there’s a catch. Passive income usually requires some kind of upfront investment: either money or time or both. You invest upfront, then reap the rewards of that investment for months, years, or even decades to come.
So set aside some time in your 30s to create your own passive income streams.
5. Buy Assets, Not Liabilities
This financial advice gem came from the classic Rich Dad, Poor Dad by Robert Kiyosaki.
Kiyosaki doesn’t just buy a car. He buys assets that will generate enough money to buy the car. It’s a genius concept.
Hopefully you’ll have a little more money in your 30s than you did in your 20s, so you’ll have the means to make this Rich Spending model work for you!
6. Reinvest Your Dividends
Quick investment tip for 30-somethings: reinvest your dividends.
Dividends are the little payouts you get monthly, quarterly, or annually from qualified stocks in your investment portfolio. On their own, they don’t do much (unless you have a whole lot of money invested). But when you reinvest your dividends, they are automatically used to buy more stock, which grows your portfolio even faster!
7. Get Serious About Insurance
As you acquire assets in your 30s, you’ll need to pay more attention to your insurance policies because you have more stuff worth protecting. Renters or homeowner’s insurance is a must to cover most of your belongings. And you may need a supplemental policy for any special items not covered by your standard policy.
Plus, you’re probably enjoying higher earning power now than when you were younger. That also needs protection. Consider disability insurance to protect you in case of an accident that prevents you from working. And maybe life insurance to financially protect your family if you were to die unexpectedly. Morbid, maybe. But it’s also practical. Similarly, your 30s are a good time to consider Medicare Planning.
8. Create Your Will
Speaking of morbid-but-practical, it’s time to create your will if you don’t already have one. If you have kids or any assets, you need a will to outline how they should be handled in the event of your death.
Not having a will creates a serious mess for your family when you’re gone. Don’t put them through that! Set aside some time to lay out the details for them just in case.
9. Repair Your Own Credit
If you ran into any credit issues in your younger years, now’s the time to fix your credit while you still have lots of time to reap the benefits of having good credit.
And you can probably do it yourself; no need to pay a credit repair specialist!
Check out How to Fix Your Credit Fast for a step-by-step guide on DIYing your credit repair.
10. Buy Classic, Not Trendy
With more disposable income than you had in your 20s, you may be tempted to splurge a little more. And that’s ok. If it’s in your budget, you can splurge without guilt!
But quick word of warning: splurge on classic pieces, not trendy ones. Trendy clothes, furniture, kitchen fixtures, and whatever else have to be updated regularly or you look like you’re stuck in a time-warp. And replacing these items always ends up costing a whole lot more money than you expected.
So if you’re going to splurge, splurge on classic, well-made pieces that will look great for 10 years or more.
Tips for Your 40s
Your 40s can come with some great financial perks. You’re probably more established in your career, you have more experience you can leverage for higher pay, and if you have kids, they’re probably getting to the age where they can be more independent, freeing up some of your time to boost your finances.
And sure, retirement may still be decades away, but it’s closer than before, so you can start laying out a financial plan for your golden years.
Here are our Top 10 Financial Tips for Your 40s.
1. Sell What You Don’t Need
By your 40s, you may notice things accumulating. Especially if you have a house. Because then you have all the storage space to collect things you really don’t need.
Give yourself a fresh start (and make a little money while you’re at it!) by selling the stuff you no longer need.
Added bonus: you’ll probably find tons of items that you can donate as well.
2. Go After Those Big Dreams
So, let’s face it, we’re not getting any younger. Now is the time to go after your big dreams.
What’s at the top of your bucket list? I’m guessing that whatever it is, it’s going to cost some money.
Hopefully you established a dream fund in your 20s or 30s, so the money to fund your dreams is ready and waiting for you. If not, there’s no better time to start saving for your dreams.
Figure out how much money you need in order to make this happen. Then set a date. How many paychecks will you get between now and then? Divide your total savings goal by the number of paychecks to figure out how much you need to save from each paycheck. Then automate that savings to foolproof your plan!
3. Re-Evaluate Your Retirement Plan
Take a look at your retirement savings. How are you feeling about them?
If you’re a little behind, now’s the time to pick up your savings pace. Can you boost your retirement contributions another 3-5%?
Also, as you get closer to retirement, you’ll want to shift from a growth mindset to a stability mindset. If you’re planning for an early retirement, you may want to move some of your money to low-risk, lower-yield bond index funds. They won’t provide the high returns of your stock-based index funds, but they’ll keep your money safe so it’s ready and waiting when you need it.
4. Find a Money-Making Hobby
For many of us, things actually slow down a bit in our 40s. Maybe your kids are grown, so you have more time to yourself. Or you’ve reached a point in your career where you don’t have to hustle like you once did.
Now’s a great time to find a money-making hobby. Something you truly love to do that can also create a little income. You might even be able to ride this hobby into retirement, “working” at your leisure. This is one of our fave financial tips because it’s engaging and fun!
Think writing, design, tours, crafts, photography, cooking, organizing…there are so many fun ways to make money!
Check out How to Launch a Side Hustle in Just 2 Weeks for a complete guide to getting started!
5. Avoid Bad Investment Impulses
Here’s a first-world problem for you to stay ahead of…
After decades of sound investments, you might find yourself looking for a new and exciting investment opportunity. And you may have a fair amount of money to invest.
So you think you can afford to invest in a friend’s start-up, or an outside-the-box business, or a cryptocurrency.
Now, if you can look at these as speculative investments, and you’re comfortable losing your investment if things don’t work out, then by all means, invest your money however you want.
But if you’re looking for tried-and-true investments, stick with your conservative index fund investment plan.
6. Give Yourself an Annual Financial Checkup
As you get closer to retirement (especially if you’re planning an early retirement), you need to make sure you’re checking in on your finances regularly. Once a year is enough to make sure your portfolio is performing as expected and make any necessary adjustments.
Here’s a quick and effective way to run your annual financial checkups.
7. Ignore The Jones’s
You’ve heard of lifestyle creep, right? It’s when your spending increases as your income increases. Suddenly you need a better house or a better car or super-lux vacations.
And this phenomenon is magnified when your friends and neighbors are all going along with it.
If you can comfortably add those things to your lifestyle, I say go for it! You’re working hard. And hopefully you’ve cultivated enough good money management habits by your 40s to know what expenses are right for you.
But please, don’t just upgrade because the people around you are doing it.
Will a luxury car really improve your life? Or would it matter very little to you because you don’t care about cars? Are you just as happy out camping as you would be at an island resort?
Do what works for you, regardless of the status symbols everyone else is focused on.
8. Grow Your Net Worth
Your net worth is simply the value of your assets minus the value of your liabilities.
Imagine you had to sell off everything you own today and repay all your debts. How much would be left over?
That’s your net worth. Growing your net worth is just a matter of shrinking your debt and increasing your assets.
If you’ve managed your money properly in your 20s and 30s, growing your net worth in your 40s will take almost no effort!
The brilliant thing about starting your investment plan when you’re young is that your interest will compound year after year. And if you’re paying down your debt, you’re also attacking your net worth from the other side. So you could literally take no action and still grow your net worth in your 40s.
But maybe you’re late to the financial game and don’t have this benefit. That’s ok! There’s still plenty you can do in your 40s to grow your net worth.
First, measure it! Simply knowing where you stand one year to the next will make you more aware of your net worth so you can recognize opportunities to grow it.
Second, acquire assets. In the section on financial tips for your 30s, we talked about the power of buying assets instead of liabilities. That’s an easy way to grow your net worth. Instead of buying things that go down in value (which is most things), buy things that go up in value like real estate, proven collectibles, and shares of index funds.
Third, keep paying down that debt. With every payment, you’re growing your net worth!
9. Invest in Your Health
I seriously believe 40 is the new 25. But still…you can’t get away with abusing your body like you could in your 20s. You probably can’t drown yourself in booze or sugar. You need to exercise just to keep your muscles. And you certainly don’t want to pull an all-nighter for any reason.
Now’s the time to invest in your health. Make sure you have proper health insurance, then do your part to keep your body healthy. You might want to invest in a gym membership or trainer. Or you may need to invest in a program to help you stop smoking or drinking. Whatever your health worries, now’s the time to address them head-on.
Taking care of your health now will save you a fortune in future medical bills.
10. Include Other Generations in Your Financial Planning
Your 40s are an interesting time. You may have aging parents or growing children, or both! And they need to be included in your financial planning. If you haven’t already added these other generations to your financial plan, now’s the time.
Factor in anything you want to provide to your kids. Education is top of the list for most people. Some want to help their kids launch their own business or even pay for their kids to travel home for the holidays.
And what about your parents? Will they have enough money to support themselves through retirement? Will you need to arrange for medical care or living assistance as they age?
Most people wait too long to start asking these questions. After, all they can be uncomfortable questions to ask yourself. But if you ask early enough, you can get out ahead of any financial issues and make sure you’re loved ones are provided for.
Feel like sharing?
Do you have any financial tips that we missed? Let us know in the comments!
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