Digest Financial Goals One Decade at a Time
Personal financial management is no small task, and conflicting advice from family and friends can make it even more difficult. So how do you know you’re on the right track? We’ve laid out some basic milestones you should aim to achieve by ages 30, 40 and 50:
By the time you’re 30…
- Have mechanisms in place for saving money. You should have started an emergency savings fund with automatic deposits.
- Be enrolled in a retirement plan, whether you’re participating in your company’s 401(k) or have opened your own IRA.
- Have an established credit history.
- Be in the process of paying down student loans (if applicable).
- If you have credit card debt, be sure you don’t owe more than 25 percent of the available balance. For example, if your card has a limit of $5,000, keep your balance below $1,250. This debt-to-credit ratio has a significant impact on your credit score.
By the time you’re 40…
- Have at least 90 days worth of living expenses stored in your emergency savings fund.
- Have at least double your annual salary in retirement savings. For example, if you earn $40,000 a year, your retirement account should have a balance of at least $80,000.
- Have a credit score of 750 or higher.
- You should no longer have undergraduate student loans
- Have a Will and Power of Attorney in place.
- If you have credit card debt, make sure you don’t owe more than 15 percent of the available balance.
By the time you’re 50…
- Have at least five times your annual income in retirement savings.
- Have short and long-term disability insurance
- Your total unsecured debt should be less than 10 percent of your available credit.
- You should no longer have a car payment.
- You shouldn’t owe more than 50 percent of your mortgage (and you should be on track to pay off your mortgage by age 65).