Best Financial Habits for Your 20s, 30s and 40s

Setting financial goals can be a daunting task. So daunting in fact, that a significant number of Generation Y, more commonly known as Millennials (those born between 1980 and 2003) have avoided the task altogether. A recent survey indicated that more than half of Millennials (those aged 23 to 38 when the survey was taken) don’t have a retirement savings account, such as a 401(k) or IRA.1 But no matter your age, it’s never too late to start saving! The important thing is that you start somewhere. Get your finances in order with these good financial habits for your 20s, 30s and 40s.


finances in your 20s

Your 20s is the decade that many start their first full-time job. It may be the first time you’ve received a regular paycheck, and you may not know how to handle it. While it is easy to let the fun and discovery of your youthful years become a primary focus in your life, you can’t lose sight of saving for the future.


Establish a Budget

One of the most common mistakes young people make is spending their paycheck without allocating it to the proper places first. Have a plan for every time you get paid. Create a budget that allows you to allocate for housing, car insurance, fitness memberships, groceries, and all of your recurring expenses on a monthly basis.


Pay Down Debt

If you’re saving aggressively while staying deep in debt, you’re only running in place. For example, if you’re only making minimum payments on your credit cards to set more money aside for savings, it’ll most likely end up costing you more over time with fees and interest. Set up a payment plan for your debts as part of your budget, starting with the balances that have the highest rates, then work your way down. For larger debt like student loans, you may want to consider refinancing your loans at a lower rate. A little bit of difference on your rate can lead to a big difference in the end.


Build Your Credit Score

To build and maintain a good credit score, you should avoid carrying a balance of more than 30% of your total credit limit. For example, imagine you have three credit cards with a combined credit limit of $10,000. You have a balance of $2,000 on card A, $1,000 on card B and $1,500 on card C. Even though you don’t have $3,000 (30%) on any one card, you still have a balance of $4,500 in total — well above 30%. Also, it’s very important to make sure you’re paying all loan payments (and your rent) on time to avoid any negative marks on your credit report.


Start a Social Savings Fund

You’re at a stage in life where there are a lot of interesting twists and turns. Weddings, babies, spontaneous trips — your social life can be very exciting, and very expensive. In addition to your normal savings account, start tucking away small amounts for special social events. That way, when weddings or surprise events come up, you don’t have to break your budget.


finances in your 30s

If you haven’t met all your financial goals for your 20s, start there. The goals of your 20s are the foundation of any budgeting plan and help you get to a stable financial baseline. If you’ve met all the targets above, your financial health is good! Here are some other financial habits you can start building on.


Contribute to Emergency Savings

Establish a “Rainy Day Fund.” This amount should be whatever it would cost you to cover rent, utilities, groceries, car payments and other essentials for six months in case of unexpected unemployment. The goal is to help you stay out of debt if suddenly unemployed. If you already have that amount tucked away in savings, good for you! Continue saving at a rate of 10% of your annual salary each year. If you can, increase your target by 2% annually.


Set Your Retirement Goals

By now, you are probably settled in your career, might have a spouse and potentially own property. It’s time to reflect on what your goals are, individually or with your spouse. Set up proper expectations for the level of comfort you’re looking for when you retire from your career and how much you can expect to save between now and then. Be honest about your lifestyle — it’s better to save more rather than less.


Diversify Your Portfolio

Meet with a financial planner to see if there are any opportunities for you. If so, discuss which ones are best for you based on your savings plan you already have in place. The recommendations of the financial planner may alter the plan you have for yourself, so make sure you reflect on the long-term risks before diving into any investment.


finances in your 40s

You are halfway through your career and in the latter half of your savings plan. Retirement could be right around the corner. Are you ready? As before, make sure you check the boxes from your 20s and 30s to ensure you have a strong foundation before you progress into these suggested goals for your 40s.


Ask to Earn More

If you are still feeling behind, consider a simple route to saving more: earning more. Many employees settle for salaries when they could ask for a small raise that could add up to a big difference. Use websites like Glassdoor to check salaries within your industry to support your negotiation.

Assess Your Standing

The best financial habit you can build is to always check in on your goals and never let them go stagnant. Your rent can change, you could switch jobs, you may get married, you could have children — many moments in life not only affect your day-to-day schedule, but your finances as well. When big changes come up, take the time to examine how they will affect your budgets.


A retirement may seem like a while away, but planning for tomorrow starts today. Each small step you take now will help alleviate stress down the road and provide more financial opportunities. From saving small to working up emergency savings, there are a lot of ways you can save — choose what works well for you and your budget. You may get overwhelmed or frustrated, but your retirement saving strategy is more like a marathon than a sprint. When you cross that finish line into your relaxing work-free zone, it will all be worth it.




1Business Insider. (October 12. 2019). 12% of millennials have taken the first step toward saving for retirement — and stopped.

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Written by:

Barbara Davidson

Babs is Lead Content Strategist and financial guru. She loves exploring fresh ways to save more and enjoy life on a budget! When she’s not writing, you’ll find her binge-watching musicals, reading in the (sporadic) Chicago sunshine and discovering great new places to eat. Accio, tacos! 

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