Personal Improvement

Finances By The Decade: Move From Your Twenties to Retirement Seamlessly

Updated on March 23, 2024 Updated on March 23, 2024
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Table of Contents  
  1. Your Twenties
  2. Your Thirties
  3. Your Forties

We tend to set certain bench marks by age. Personal finance is no different. What should you be doing for your finances by the decade?

We and society tend to group achievements by decade. You should do, have, be X  by X age. What should you be doing personal finance wise before you slip from one decade to the next?

Your Twenties

Maybe you’ve just graduated from college. Well done! The world is your oyster. This is a glorious time of life. You don’t have to go into full beast mode just yet, unless you’re a PF wunderkind like Andrew. But you also can’t dig yourself a hole.

Have Fun

Unless you are a Peter Pan like me (I recommend it) and don’t plan to buy a house, get married, and have kids, you are unlikely to ever be as free as you are right now. You may have some student loan debt but your interest rate is hopefully low and not something keeping you awake nights.

Enjoy it. And by that I don’t mean use a credit card to buy a bunch of useless shit, but spend money on experiences. Travel, join the Peace Corp, take a low paying job that allows you to spend your day doing something you enjoy and care about and making a change in the world. Soon enough you will be too jaded to think it makes a difference.

Lifestyle Inflation

You are probably used to doing without. No fancy pad, no fancy car, no fancy clothes. If you’ve never had it, you don’t know what you’re missing. So miss it a little longer. Continue the lifestyle you had been living and save the money you would spend upgrading.

Build An Emergency Fund

At this point in your life an emergency fund is more important than a retirement fund. Retirement is a long way away but an emergency could be just around the corner. A job loss, a car repair. You need money to cover things like that. Six months of expenses is the gold standard. At this age that might be asking too much. Get at least $1000 in that account.

Inform Yourself

Twenty years from now you don’t want to be saying, “I wish I knew then what I know now.” Arm yourself with information. You don’t have to read the Wall Street Journal from cover to cover but read a few books, listen to a few podcasts, read a few blogs.

Set up a Mint account. Learn to watch where you are spending money and use what you’ve learned from the above mentioned sources to know where you are hemorrhaging money and where you can do better.

Set up a Betterment account to get a jump on investing and as a place to park your emergency fund so you are getting more gains than the crappy sub 1% interest you’ll reap in a checking or savings account.

Be Daring

Take a gap year, move to a city or country far from friends and family. Take a job you bluffed your way into. The older you get the more books, furniture and dependents you will accumulate and that shit is not portable. If you make the leap, the net will appear.

Your Thirties

Life might be getting a little more complicated now, marriage, family, a home. It’s time for a little less fun and a little more buckling down as you enter your thirties.

Emergency Fund

This should be fully funded now, six months of expenses or $25,000, whichever is higher. Remember, this is for real emergencies, a home repair, a medical expense, not a vacation or a big flat screen television.

Save For Goals

Do you want to get married? Expecting mom and dad to foot the bill is pretty out of date. Unless you are going the courthouse route, and there is nothing wrong with that, even a small wedding will cost a few thousand dollars.

Now that you’re settling into a career and perhaps contemplating children, you might start thinking about putting down some roots. A home is not always the best idea financially but it definitely has non-monetary benefits. Start saving for at least a 20% deposit.


Hopefully you started in your twenties and have some understanding of investing now. Leave your emergency fund in Betterment but you can branch out a bit now into something like Vanguard, individual stocks, and rental properties.

Save For Retirement

Fully fund whatever retirement accounts are available through your employer and consider starting an outside retirement account like an IRA. You should be saving 10-15% conservatively toward retirement.

Pay Off Student Loans

They’ve been hanging around for awhile now. Start throwing some extra money each month at them so they aren’t hanging over your head into your 40’s.

Estate Planning

If you have a spouse and or children, make arrangements, both financial and custodial for them. If something happened to you, could they stay in their home or would they have to sell it. What if the unthinkable happened and both you and your spouse died? Who would take care of your children and how would they pay for it? Nasty to think about but once you have a plan in place, you will sleep easier at night.

Advance Your Career

You should be advancing now, both from a position stand point and financially. If you aren’t getting regular promotions, or at least regular raises, it’s time to look elsewhere.

Even if you are advancing and happy in your job, periodically check around and see what else is out there. It’s faster to make a big pay jump by changing employers than my rising within the same company.

Want to get your money under control?

This is our guide to budgeting simply and effectively. We walk you through exactly how to use Mint, what your budget should be, and how to monitor your spending automatically.

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Your Forties

Getting down to the wire now, especially for those of us who would like to retire earlier than 65.

College Education

If you have kids, it’s time to start thinking about their education. That does not mean you should pay for the entirety of their education. Parents did that back in the day but the costs are too high now, even for big earners.

But you don’t want your kid crippled by loan debt as you might have been. Start investigating things like grants and scholarships. Talk to them about doing part of their education at a community college, talk to them and see if they even want to go to college at all, or at least upon high school graduation.

I think we should take a leaf from much of the rest of the world’s book and give kids a gap year. That doesn’t have to mean back packing through Europe for a year but that would be fun. It could mean working for a year to save some money. A year off affords some time to figure out what they want to do, and maybe more importantly don’t want to do. College isn’t going anywhere. It will be waiting a year, or two or five from the point of high school graduation.

At any rate, DO NOT sacrifice your retirement savings to fund your kid’s education. They have a lot longer to make money to pay off student loan debt than you have before you retire. Unconditional love doesn’t mean screwing your own future.

Don’t Buy A Big House

There is no need. The average home size has grown more than 1000 square feet in the past forty years from 1660 square feet in 1973 to 2679 square feet in 2013. Holy crap, frankly either of these sound enormous to me having lived in NYC for fifteen years.

In the same span of time, the average number of people per household has shrunk from 3.01 in 1973 to 2.54 in 2013. So why do you need a bigger house if it holds less people? You don’t, no one does! People are not filling those houses with more kids but with more stuff. Stuff that costs money and you probably don’t need.

A smaller house will automatically mean less stuff which is cheaper, nicer to live amongst, and easier to move when the time comes. At some point in the not too distant future you will have an empty nest. You don’t need five bedrooms. Believe me, when the grand kids come to visit, they will be happy to sleep on a pallet on the floor. Even better, if you build a pillow fort to sleep in, they will worship you forever.

Pay Off Your Mortgage

You don’t have to necessarily do this before you turn fifty but you should have a plan in place to have your mortgage paid off before you retire. Not having that monthly payment and having the flexibility to move to warmer climes or nearer to your grown children is something to aspire to.

Talk To Your Parents

This is not the most pleasant conversation to have but it is important. Find out what plans your parents have in place for their retirement and their personal health needs if one or both were unable to live in their home without help or at all.

Having this conversation now and helping them to plan if they haven’t will help you and your possibly resentful spouse avoid become part of the “sandwich generation,” meaning you are caring for children and aged parents.

Check Your Progress

Go over all of your finances and see where you are compared to where you need to be to retire at what age you would like to retire by. If there is a gap, the good news is that you are probably making more money at this point in your life than you are likely to ever again.

If you aren’t where you’d like to be, go over your budget and see where you can make cuts. Put every raise into your investments or retirement accounts. Don’t panic if your numbers aren’t adding up, there is still time, but it seems a lot more finite now than it did ten years ago.

Having guide posts to measure against each decade will help you stay on track so you can move from your twenties to retirement seamlessly.

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Candice Elliott - Senior Editor Candice Elliott is a substantial contributor to Listen Money Matters. She has been a personal finance writer since 2013 and has written extensively on student loan debt, investing, and credit. She has successfully navigated these areas in her own life and knows how to help others do the same. Candice has answered thousands of questions from the LMM community and spent countless hours doing research for hundreds of personal finance articles. She happily calls New Orleans, Louisiana home-the most fun city in the world.

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