Updated: July 31, 2020
What financial goals should you strive for in your 20s, 30s, and until you retire in your 60s and beyond? Here’s a list that can serve as your guide.
In your 20s
Build an emergency fund
Ideally, this should be at least 6 months worth of your necessary expenses. If you achieve this, you would have also learned the habit of saving, which is essential for attaining financial independence.
Be a responsible credit card user
Being responsible means paying your credit card balance IN FULL every month, and not just a portion nor the minimum required amount. This will teach you how to properly manage debts.
Understand how paper assets work
I’m referring to time deposits, government and corporate bonds, UITF and mutual funds, and the stock market. Learn what they are, how they work, why they exist, and how you earn (and lose) money from them.
Establish a healthy lifestyle
Your unhealthy habits during your 20s will come back to haunt you down the road. Medical expenses are one of life’s biggest stressors, minimize it by taking good care of your body.
Start your retirement fund
Yes, start building your retirement fund as soon as you have income. It doesn’t have to be a lot, just an amount that’s comfortable for you. Put it in an equity fund.
In your 30s
Establish a strong and steady cashflow
People buy a car, get married, secure a home, and start a family during this decade. You’ll need money to do all those things, which a strong and healthy cashflow from a career or business can provide.
If you haven’t yet, then it’s time for you to secure the necessary life insurance and long-term healthcare insurance, especially if you already have your own family.
Build your paper assets portfolio
It’s now time to apply what you learned and build your investment portfolio. It’s best to diversify with low-, moderate-, and high-risk types of investments; as well as a good mix of bonds, stocks, and investment funds.
In your 40s
Create passive sources of income
You can’t work forever, that’s why you need to do this. Popular sources of passive income are real estate rentals, business dividends, royalties, and commission income.
Design your retirement
At this time, you may already have a good idea where you want to retire. Take it a step further and create a retirement plan, and see how much it will cost to turn your dream retirement lifestyle into a reality.
In your 50s
Work on your retirement plan
How do you see yourself when you retire? Running a small business? Traveling the world? Pursuing a new career? Whatever it is, it’s time to prepare your mindset and your finances for that chapter in your life.
Have no more liabilities
Retirement is just around the corner. Make sure that your debt obligations, particularly any loans you have, are paid in full before you retire.
Build enough passive income to cover your necessary expenses
You cannot depend on your retirement benefits alone. That is often not enough for your cost of living expenses. Augment your cash flow with passive income sources for a worry-free retirement.
In your 60s and beyond
Do estate and legacy planning
Memento mori — remember death. It will eventually happen to each of us. Make sure that our loved ones won’t become financially burdened when it happens.
Realize your retirement plan
Whatever, wherever, and however you wanted your retirement to be, it’s time to follow your plan. Don’t be afraid to redeem investments and surrender insurance policies, if needed. This is, after all, the ultimate time to enjoy all the money you’ve saved and invested through the decades.