Financial’s Dos and Don’ts by the Decade.

It’s never too early (or too late) to start planning for your financial future, but if you’re the type that shuts down at the mere mention of words like “budget” and “401K,” don’t despair. Our friends at Parent Financial have come up with some simple “Dos” and “Don’ts” to help you get on the right track, no matter what stage of life you’re in. Founder and Financial Adviser Court Creeden chatted with us about everything from your first attempt at getting credit to your last official paycheck before retirement. Here’s what he had to say:

If you’re in your 20s:

• Do build your credit. You’ll need credit to apply for rental apartments, mortgages, car loans and more. That doesn’t mean to apply for a card and go on a spending spree. Court says it’s important to make sure you’re keeping your spending in line with your budget (Don’t have a budget? Get started creating one here). However, by using credit you may accrue points and build your credit score at the same time.
• Don’t spend everything you make. Travel, cars, clothes and fun are great, but the 65-year-old version of yourself will be so appreciative if you start saving sooner. One trick to curb spending: wrap a blank spreadsheet around your credit card and write down every purchase you make to hold yourself accountable.
• Do save for retirement, even if it means you have to really push yourself to start saving. Plan a certain amount of retirement savings into your budget, and have it automatically added to your savings account each month. Court says if you save $5,000 a year starting at age 25 (and earn six percent interest), you’ll have about $820,000 by the time you’re 65. If you start at 35 you’d have to save $9,800 annually to achieve the same amount.
• Do create an emergency fund. Life happens. Make sure that you have a cushion to cover a job loss, medical emergency or any other income-impacting event. Court suggests starting with at least three months of your minimum monthly expenses as your savings cushion.

If you’re in your 30s:

• Do pay off debt. Any lingering credit card debt from your younger, more foolish years needs to be paid off. By the end of your 30s, you should be very close to paying off any remaining student loans as well. Feel like you’re drowning in debt? The folks at Parent Financial will help you create a plan to get out of the red. Just give them a call.
• Do understand home ownership before you take the plunge. It can be tempting to call a real estate agent when all your friends are getting their own backyards with white picket fences, but make sure you understand how the purchase of a home can impact your lifestyle. That means you’ll need to have clarity on taxes, insurance, PMI, maintenance, HOA fees and more to truly fit the full cost of the home into your budget. Did one or more of those terms go right over your head? You might not be ready to be a homeowner yet, and that’s OK. There’s nothing wrong with renting if buying doesn’t fit into your plan quite yet.
• Don’t keep up with the Joneses. For every pay increase, be sure to increase your savings rather than using all the money on newer and nicer homes and cars.
• Do update your insurance. Make sure you understand exactly what you (and your spouse if you’re married) have through work. Most people need supplemental life insurance and disability insurance outside of their group plans to ensure they’ll be able to maintain their current lifestyle in case of a death or disability in the family. It might not be a fun conversation, but it’s one that will pay off in the long run.

If you’re in your 40s:

• Do understand the true cost of college. Court says it’s important to have a clear picture of whether you’re on track for your own retirement. If not, stop putting money aside for your kid’s education and focus solely on building your retirement portfolio. Your child can always take out loans for college, but there are no loans for you to take out in retirement.
• Do take time for investment management. Get a clear picture of your retirement goals by understanding why you have each account and where they are invested. You’ll also need to make sure you have an understanding of how each account is taxed, and increase your savings if necessary to get back on track for retirement.
• Do get all of your legal affairs in order. If you don’t have one yet, sit down with an attorney and draw up a will, decide medical directives and designate a healthcare power of attorney.
• Don’t allow debt to creep into your life. Kids can get more expensive as they get older, but you still need to continue to do a great job budgeting, understanding and managing all of your expenses. Afterall, the kids will be out of the house soon and you’ve got a lot of living left to do.

If you’re in your 50s

• Do take advantage of catch-up contributions. If you’re over 50, you can increase your contributions to your IRAs and 401ks.
• Do focus on the mortgage. Court suggests trying to get your payment plan in line with having no outstanding mortgage going into your 60s and retirement
• Do rebalance. As you get closer to 60, make sure you have a clear picture of the risk in your portfolio and ensure that you are well positioned in the event of market downturns.
• Don’t make the big mistake. Court says with once people accumulate wealth, they may see the opportunity to buy a beach home or start a company. It might be possible, but make sure you have a clear understanding of how any financial decision can impact your long-term plan.

Need help getting your financial house in order? Give Parent Financial a call. Their friendly, knowledgable staff can work with you on budgeting, insurance and everything in between.

Meet our expert:

Court Creeden is the founder of Parent Financial, a boutique financial planning firm that provides comprehensive financial planning for parents. Parent Financial helps busy parents come up with a clear plan for their family in the areas of insurance, college planning, investments and estate planning. Parent Financial has advisors in Charlotte, Charleston and Greenville. Court has been featured in the Wall Street Journal, MSN Money, Dow Jones, Time and countless parenting articles for his work with parents.

Securities, investment advisory services and financial planning offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. 6000 Fairview Road, Suite 400, Charlotte, NC 28210. 704-557-9610. Parent Financial is not a subsidiary or affiliate of MML Investors Services, LLC or its affiliated companies.

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