The Financial Decisions to Get Right at Every Stage and Age

Financial Decisions

This week, your Money Guys were joined on the show by special guest Alan Moore to discuss the various financial decisions that everyone needs to make at different stages and ages of their lives.

Alan is the co-founder of the XY Planning Network, the leading organization of fee-only financial advisors that specialize in working with Gen X & Gen Y clients. He’s also the President of Serenity Financial Consulting, a fee-only RIA and location independent financial planning firm. He currently lives in Bozeman, MT so that he can hit the slopes on powder days.

In this episode, Alan, Bo, and Brian each walk through some pitfalls to avoid, blind spots to be aware of, and solutions you can implement with your personal finances.

Money Matters to Think about When You’re in Your Teens and 20s

Alan takes on what younger generations should watch out for and think about. For those in their teens and 20s, he says to take your financial decisions seriously.

This decade isn’t a “throwaway,” and it’s never too early to think about developing financial independence and investing in your future. The decisions you make now do matter. Alan also has a few suggestions for people who are just starting out:

  • There are a lot of big things and changes happening right now — but don’t forget about the little things. Don’t let small mistakes trip you up and hinder your financial progress!
  • Invest in financial assets.. and your own skills, knowledge, and abilities.
  • Don’t be afraid to ask for what you want — but understand you’ll need to do your homework before you do. Don’t plan on getting what you ask for if you don’t put in the work first.

Keeping on the Right Financial Track in Your 30s and 40s

Bo picked up after Alan to help those at a little later stage in life — those who are in their 30s and 40s.

If you’re in this age group, you’re still young! But you’re not “entry-level” anymore, and it’s likely that this stage is bringing new experiences and life changes to you.

Bo brings up some common pitfalls that people in their 30s and 40s need to watch out for, including issues with your investment portfolios, spending temptation and lifestyle inflation, and simply forgetting to re-check your financial to-do list after you go through some big life milestones.

Finishing Strong with Your Financial Decisions After 40

Brian then addresses the over-40 group and the financial decisions they need to think about and the blind spots to be aware of.

The biggest issue? Time flips on you, and it’s no longer an advantage but a liability. That doesn’t mean it’s too late to take action, but it does underline the fact that you do need to jump on your financial goals if you haven’t gotten serious yet.

Remember, “someday” is not a day of the week. Think about these things, and if you need to take action on anything, do it today:

  • Understand your risk capacity. Even if you still feel comfy with risk, you may not realistically be able to handle swinging for the financial fences anymore.
  • Organize and tighten up your finances. Don’t get sloppy, and don’t abandon a plan of action at the finish line!
  • As much as you don’t want to think about it, you need to understand your mortality. Even if you feel young mentally, you can’t pretend you’re not aging at all. (Sorry.)

No matter what your stage or age, there are financial decisions to think about — and to get right. It’s never too early (or too late!) to take smart action and improve your financial situation.

So no matter what group you fall into, keep up the good work in avoiding pitfalls and making the right money moves.

Want help with this? You can always reach out to financial pros to help get you on the right track. You can also email your Money Guys at brian@money-guy.com and bo@money-guy.com — and you can email our special guest, Alan Moore, at alan@xyplanningnetwork.com.

 

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How to Prioritize Financial Goals

Here's how to prioritize your financial goals

The guys got a great listener question a few months ago — from a husband and wife team who listen to the podcast together! — and are taking it on for this episode.

The question: how much should you save and invest if you have debt?

This is a good one to cover, because it’s difficult for most people to get through life without taking on any debt at all. Most of us don’t have over a hundred thousand dollars lying around in cash to put down on a home, or that same amount again to pay for higher education costs.

So we take out mortgages and student loans. (Or we just don’t yet have good money management habits and end up overspending on the credit card.)

Whether it’s good debt or bad debt, chances are you’ve had a little bit of it — which means you’ve had to juggle multiple financial goals, too.

We need to save and invest wisely for retirement, establish an emergency fund, repay debts (be it consumer credit card debt or a car loan or a mortgage),and more.

The Basics of How to Prioritize Financial Goals

Brian and Bo go over some of the basics that we can all abide by when it comes to prioritizing financial goals:

  • Pay yourself first: That means taking care of your retirement needs first. You need to be able to take care of yourself financially (now and in the future), so this should almost always be at the top of your priority list.
  • Have an emergency fund: Again, this goes back to taking care of yourself. That emergency fund will help safeguard you against unexpected expenses that could push you into debt.
  • Get rid of debt: Once you’ve secured your savings, it’s time to look at aggressively paying down any debts you may have.

The exception to this order? When you have high-interest rate debt. Usually associated with credit cards, debts with interest rates over 8% or so are your financial emergency, and need to be addressed immediately. That doesn’t mean sacrifice savings entirely — but it does mean making room in your budget to pay down debt.

Ideally, you’ll be saving 15% to 20% of your gross income for your retirement. But that may change depending on your debt situation. Again, it all depends on that interest rate.

Avoiding Money Wasters

Prioritizing your goals will get a lot easier if you can avoid some financial pitfalls that many Americans succumb to. The guys took a look at a list republished by J. Money at Budgets Are Sexy to see what average people wasted the most money on.

One of the biggies was no surprise: credit card debt. This is a huge waste of your hard-earned money and a great reminder of the importance to live within your means and avoid spending more than you can truly afford.

Others that Brian and Bo point out are deal websites (with a great quote from another financial blogger, Frugalwoods) and fees (along with a tip on getting out of them from time to time).