Personal finance is something you think about your entire adult life, and most of us have a common end goal: to achieve financial independence and enjoy a comfortable retirement. But once you reach adulthood, figuring out when and how to start spending, saving and investing can be overwhelming, especially when combined with all of your other new adult responsibilities.
Each decade of your life often represents a different financial phase that comes with new decisions to make and major financial changes. Here are a number of important moves to make each decade. While this list isn't an exhaustive list, and everyone's timeline will differ, it should give you a useful starting point to planning for your own long-term financial security.
Despite occurring at a relatively young age, graduating high school brings on an important start to the rest of your life and comes with some major decision-making. Whether you decide to start your career, attend college or trade school or join a branch of the military, weigh each option carefully. Today's graduates have the luxury of unlimited information at their fingertips, so in addition to what your guidance counselor, parents and friends suggest, do your own research.
Look beyond the first few years of your chosen path and see what it has to offer later in life in terms of lifestyle, salary and benefits. Consider any loans you'll need for school and know ahead of time what you will owe versus what you could make.
When it comes to saving for your retirement, 20 is the new 30. Starting to save in your 20s after you begin earning an income can give your money even more time to grow and make a significant impact compared with starting in your 30s. Plus, it's easy to think about investing as something you'll do later on, but the earlier it becomes a habit, the easier it will be to prioritize your whole life. This is also the time to build up a good credit score -- it will come in very handy in the next decade.
Your 30s are likely when you will enter the next phase of your career and start to earn more money. If that's the case, it should also be a time where you assume more responsibility and shift your priorities. It might be tempting to spend your new higher income on luxuries, but instead take the opportunity to redo your budget. Think ahead a few years to the future, whether you want a family, house or to move to a new, pricier area, and plan how you will afford it. Use your new earnings to protect yourself (and your loved ones) with insurance policies and emergency funds.
In your 40s, you probably have some debt in the form of a mortgage, car payment or credit cards. Come up with a solid plan for paying these off and chip away at them. At this point you should consider getting a financial advisor to guide you through your new assets and determine your long-term goals.
Retirement is no longer feeling as far off in your 50s. This is the time to reevaluate where you are in retirement savings and make adjustments if necessary. You want to enter the retirement phase of your life with little to no debt if possible, so consider increasing the amount you pay off for any remaining debts each month. This might be a time when any children leave the nest, potentially making it easier to focus more resources on the next phase of life.
If you decide to retire during the most traditional time, then one decision you'll need to make is how to take your pension. Work with a financial advisor (as you hopefully have done for a number of years) to decide the best course. This time is also important for thinking about long-term care insurance and planning for your later years and any healthcare and additional costs you may need.
Your 70s and beyond:
Continue to work with a financial advisor and make sure your affairs are in order -- but mostly, your 70s and beyond are a time to enjoy the planning you put into your finances and your lifetime's hard work.
Jon Lal is the founder and CEO of coupons and cash back website BeFrugal.com, which saves shoppers an average of $27 per order thanks to coupons plus an average of 7 percent cash back at more than 4,000 stores.
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