“The best time to start building your wealth was yesterday – the next best time is to start now.”
Okay, I’ll admit I took some liberties with that quote. But, bear with me.
The emails I am sending you today and tomorrow are a special mini-series all about building wealth throughout your life. This is an email that you might want to share with people you know because it could change the course of their financial future.
Today, I’ll be covering what you need to do in your 20s and 30s, and tomorrow we’ll wrap up with your 40s and beyond.
Your 20s – Getting Started
- Start by creating an emergency fund of 3-6 months worth of living expenses. If you have a less stable job like a commission-based job, aim for 6-12 months.
- Does your employer have a 401(k) plan and offer to match it? Make sure you’re contributing enough to maximize that match.
- If you can, open a Roth retirement account. In 2021, you can contribute up to $6,500.
- If you max out your Roth contributions, add more to your 401(k) – you can add as much as $19,500.
- One bit of bad luck and totally derail your progress. Make sure you’re insured appropriately – particularly disability and auto insurance.
Your 30s – Getting Established
- Avoid living beyond your means, even if you’re earning more now.
- Ramp up your 401(k) – you should be putting aside the recommended 10% of your income if you start young, but I can help you crunch the numbers if you reach out (see below for my contact information).
- Maxed out your 401(k) contributions? Start investing beyond your retirement account. Get diversified with both stocks and bonds. The good news is you’re young, so you can afford to take a little risk here.
- Major life events happen in this decade. If you’re planning to make a major purchase like a home or have children, save for that as early as possible.
- If anyone is depending on you to bring income into the family, you should consider life insurance.
I get it – this might seem like a lot to accomplish, especially if you’re not a super high earner. And, it seems like retirement’s a long time off in your 20s and 30s – but I encourage you to start now, so you’re not panicking when you realize that you’re in your 50s and have nothing saved and retirement’s just a stone’s throw away.
You don’t have to go it alone, either. Having a pro in your corner to guide you through your financial journey is one of the best ways to make sure that you’re making the right moves and not getting lost along the way.
If you’d like to get in touch to start your own plan, call 513-563-PLAN (7526) or go online to book a 15-minute chat about it now.
Regards,
Nikki Earley, CFP®
