What does financial health look like over the decades? – St George News

Stock photo | Photo by Unsplash, St. George News

CHARACTERISTIC –The Consumer Financial Protection Bureau, combined with a review of research and consultation with leading experts, found that financial wellness includes the following four elements:

  1. Have control over day-to-day, month-to-month finances.
  2. Have the capacity to absorb a financial shock.
  3. Be on track to achieve your financial goals.
  4. Having the financial freedom to make the choices that allow you to enjoy life.

Another way of thinking is that financial well-being is the feeling of having financial security and freedom of financial choice, both now and in the future.

So what does financial health look like at each age? The timeline will vary from person to person, but below are suggested financial milestones to achieve in each decade of life. This is not an exhaustive list, but provides a baseline of things to consider. Milestones achieved at an earlier age, such as a good credit rating and an adequate emergency fund, should continue in later years.

10 years

USU Extension discusses financial health through the decades, location and date unspecified | Photo courtesy of USU Extension, St. George News

Learn to add and subtract, sell a service or good for money (ie lemonade, car wash, cookies, babysitting, cleaning, etc.). Save for something you really want, use the money to buy a gift for someone, or donate to charity.

10-20 years old

Work for money, have checking/savings accounts, set up a Roth IRA, decide what kind of lifestyle you would like to live, what salary you will need for that lifestyle, and what career/job work you’ll need to support that. Build up credit with a credit card with a low borrowing limit and use it regularly, but pay it down monthly.

20 years

Learn how to invest, budget, track your income and expenses, contribute regularly to a Roth IRA, and build credit. Pay off your debts on time, stay below 30% of your allotted amount of credit on credit cards, save for emergencies, have $1,000 in an emergency fund, save for three months of expenses in a separate savings account and get adequate insurance.

File photo by Unsplash, St. George News

30 years

Achieve financial independence from parents, including independent living arrangements and no “subsidies” to pay for expenses such as insurance premiums and mobile phone bills. Have student loan debt in full or close to repayment, have a year’s worth of salary saved for retirement, and establish a good credit history with a credit score in the mid-700s or higher.

Become a savings/investment regular, have at least 3 months of income set aside for emergencies, have credentials such as certifications and college/vocational degrees completed or nearly completed, and have documentation of up-to-date estate planning and life insurance to protect dependents or co-signers, if applicable.

Four years

Have three times annual salary saved for retirement, save at least 15% of gross income, establish college savings for children where applicable, and increase investment expertise and asset diversification of the investment portfolio. Increase human capital, including job skills and knowledge to remain employable and earn promotions/raises.

50 years

Have six times the annual salary saved for retirement; make contributions to a catch-up retirement savings plan, increase knowledge about the specifics of Social Security, Medicare, and employer retirement benefits, increase knowledge about finances for aging parents and communication on caregiving issues. Engage financial advisors as needed as net worth increases and finances become more complex.

60 years

Have saved eight times your annual salary for retirement, paid off your mortgage, home equity loan and credit card debt before you retire. Use catch-up retirement strategies, if necessary, such as downsizing, relocating, working longer and selling assets, learning new skills, and/or making other transition preparations into a ‘second act’ job or voluntary role.

Questions to Ask

Am I on track with the financial milestones suggested each decade? What would it take to get on track with my current decade?

For more information on financial milestones by decades, visit this website. For more information on real money, visit this website. Join the conversation on Facebook and Instagram @utahmoneymoms.

Written by AMANDA CHRISTENSEN, USU Extension Associate Professor.

Copyright St. George News, SaintGeorgeUtah.com LLC, 2022, all rights reserved.

About Ian Crawford

Check Also

Retirement savings on PIP: How can I provide a pension for my daughter who is applying for a PIP | Personal finance | Finance

“I have a 40 year old daughter who is autistic (high scale) currently on PIP. …