No matter what stage you’re at in life, setting money aside for your future is always a wise choice. If saving more money is one of your New Year’s resolutions, it’s time to develop a structured plan. The financial responsibilities you face are different for each stage of life, and these responsibilities impact the saving decisions you’ll make.
Let’s take a look at a few age-specific saving tips as we head toward the new year.
Baby Boomers (Age 51-69)
If you were born between 1946 and 1964, you’re considered part of the Baby Boomer generation that makes up more than a quarter of the U.S. population. In some aspects, your financial situation may be better than some of your younger counterparts. But, your retirement account may not look the way you’d hoped it would be at this point in your life. In fact, only 60 percent of Baby Boomers say they have any retirement funds at all. Most Baby Boomers don’t have a pension, and they’re often faced with Medicare and Social Security challenges.
You may find yourself feeling a little anxious about your finances at this point in your life. You’ll need to be more serious about saving, including simplifying your lifestyle so more money can go into savings. Here are a few ideas to help you pocket more money:
Go back to work. It’s no surprise that many people in this age bracket consider going back to work. There are always basic jobs that can help you add a little extra income – and keep you busy now that you’re retired.
Live on a minimum budget. This is the time to think about downsizing. A smaller house is usually cheaper – and involves less up-keep.
Increase post-retirement investments. If you’re considering accelerating your retirement investments, consider consulting a brokerage firm for help making decisions.
Make sure investments are properly allocated. More than half of Baby Boomers aren’t sure how their investments are allocated. Do some research on your own, and consult a brokerage firm.
Consider long-term care insurance. This insurance helps to cover the costs of long-term care beyond a predetermined period of time.
Most Baby Boomer parents are taking care of their adult children – at the expense of their own financial security. According to research done by Ameriprise Financial, 93 percent of these parents confirmed that they support their adult children financially. Seventy-one percent said they helped children with college tuition and loans, and 53 percent helped their children buy a car.
Gen Xers (Ages 36-50)
These days, most Gen Xers – those born between 1965 and 1979 – are busy with raising their families, advancing their careers, and caring for aging parents. These can be some of the most expensive years of your life, which can cause challenges with managing your cash flow. Raising kids can be expensive!
At this point in your life, money management is critical. Every time you get paid, it is important to set aside a fraction of your income before you spend it. Give yourself time to analyze your expenses, and plan accordingly.
Let someone else save for you. If you can, have your bank or employer take money out of your paycheck and deposit it into another account. This can help you reach your savings goals or build your retirement account.
At this stage of life, most people make the biggest purchase they’ll ever make: A home. Set yourself up for the future as much as possible when tacking on a mortgage.
Millennials (Ages 19-35)
When it comes to daily finance management, Millennials tend to be doing much better then Gen Xers. But when it comes to making financial decisions, they live in the moment and can often forget long-term financial plans like retirement.
Reduce housing costs. Most people spend 30 percent of their monthly income on rent. Reduce this cost by living at home or sharing an apartment.
Make a plan for student loans. Millennials are likely to be in debt with student loans. The best plan is to go for an income-based repayment plan.
Give yourself an allowance. For discretionary spending, allocate yourself a weekly or monthly allowance. This ensures that you do not spend more than you should.
New budgeting apps like Mint have also made setting goals as well as tracking your spending more manageable. It is also important to monitor your credit score. This becomes increasingly relevant if you are planning to buy a home in the near future. Your credit score plays a big role in determining the mortgage rate that your qualify for – and how much house you can afford.
Regardless of the stage of life you’re in, take time to carefully save and manage your finances. Regardless of your current economic status, you can always benefit from efficient planning and quality advice.
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