Financial Planning through the Decades

Updated: Jan 25

Your plan should change over time. Follow these tips to update your financial plan for your 20s, 30s, 40s, and beyond




TL;DR: Ask the Question. Start Early. Learn good financial habits. 


Your youth is a time for exploration, getting to know yourself, traveling, making mistakes, learning from said mistakes, finding the right career path, and carving out what makes you, well, you. Oh, all that, AND establishing good money habits. You will appreciate having good money habits your entire life, especially if you start those habits while you're young—and before it's too hard to change your ways.


Keep in mind that, while it's awesome to develop great money habits when you're young, ANY time is a great time to start practicing them. You're never too old (or too young) to practice good money habits (SEE: How to Teach Your Kids about Finances).


Overall there are three basic elements for financial well being: Ask the question, start early, and learn good financial habits.


Ask the Question


Asking the right question is the first critical step to creating a financial plan for your state in life. Some important questions to start pondering include:


Start Early: Start early, start early, start early! 


The more you save, plan and budget now, the better off you will be later. The power of compounding (essentially, earning interest on interest) is truly amazing. Just you wait!



Establish Good Financial Habits


This concept goes hand in hand with starting early. Establishing good financial habits early on in life is much easier than trying to get caught up later. So, what exactly are "good financial habits"?



Many of us ignore these basic financial planning strategies. Keep in mind, we don't subscribe to the misnomer that some people are "good with money" and some are not. Anyone can learn good financial habits. Saying "we simply are not good with finances" sometimes feel like an excuse. (#sorrynotsorry, sometimes it's tough love over here.)



Your To-do's by the Decade


The Money 20s

  • Watch your spending. Assuming you are most likely making more money than you ever have, you may be tempted to spend frivolously. But hold on, don't do it! Consider your purchases before you make them and establish good spending habits.

  • Get into the habit of tracking your budget. (See: How to Create a Budget) Yes, you need a budget. Don't have one? Start with tracking your expenses and keeping an eye on how much you're spending on entertainment items like dining out, travel, shopping excursions, etc. From there, build a more comprehensive budget when you are ready.

  • Pay off debt (especially high interest debt) as aggressively as possible. Credit card debt? Pay this off first and aggressively. And try not to rack up any more. Pay off your credit card every single month. If you can't pay cash for it, you can't afford it. Student debt? Come up with a plan to pay it off next. (See: Should You Refinance Your Student Loans?)

  • Save, save, save. Be aggressive about your saving. Build an emergency cash reserve and start thinking about retirement (No, it's not too early.)

  • Open a retirement account. You are very likely eligible for both a 401(k) and an IRA. You should open and fund these accounts to the maximum amount each year. (See: No 401k? We Can Work with That!)

  • The earlier you start, the better. Especially if changes occur later in life such as a family, college fund(s) and health emergencies, you'll be extremely thankful you already had these in place.


The Dirty 30s

  • As you enter your 30s, other elements come in to play. The new decade brings new purchases like buying a house, getting married and starting a family. Have basics in place and adjust your budget to include these new expenses, when necessary.

  • Life changes. House? Kids? Spouse? Career changes? Make adjustments to your plan as you go.

  • Reevaluate your emergency cash reserve. The more risk you have (more mouths to feed) the higher reserve you will need.  

  • Reevaluate your life insurance for proper coverage.

  • Have your estate in order. Will your loved ones be taken care of if you were to pass away unexpectedly? (See: How to Create an Estate Plan)

  • Set up and start to fund college savings plans for your children. (See: What's the Right College Savings Plan for Me?)

  • Get aggressive about saving for retirement. By now, you should have retirement accounts set up and funded. Continue to put as many dollars into these accounts as you can. Be diligent, have a plan and sock away as much as possible. Push yourself to save more each year.  


The Horde-y 40s

  • By now debt your debt should be under control. You should feel comfortable about your cash reserve and you should be aggressive about savings.

  • These may be your peak earning years. The key here is to save and sock away (or "horde"... see what we did there?) as much as you can and get serious about retirement. Try to allocate any new raises toward your retirement.

  • Maximize your 401k plan contributions and any other contributions you can make into tax deferred and savings accounts.

  • Revisit lifestyle planning items like re-evaluating life insurance, take another look at your estate plan, aggressively fund college savings plans for your children.


The Nifty 50s

  • Get even more aggressive about saving for retirement. You can take advantage of catch up provisions, where you can contribute even more to your retirement accounts.

  • Think about what your retirement looks like and discuss it with your partner. Where do you want to live? What does retirement mean to you (some consulting, no work at all, travel etc?) Discussing this long term plan early on can help you know where you're going, and more importantly, how to get there.

  • Review your long-term care options and know what's best for you. 

  • Make sure your debt, estate and cash reserve are in order.

The financial health race is not about sprinting to the finish line. It's more like a leisurely walk to the end. Starting out at a steady and consistent pace will reap rewards even before the journey’s end.




Great news! The Pocketnest app is now available! Download Pocketnest and get your finances in order—in just 3 minutes a week! No jargony finance-speak, pricey fees or in-person meetings required.


Have questions? We love your questions... email us at hello@pocketnest.com

  • 70 2
  • 70 4
  • 70 3
google-play-badge.6a248cbe (1).png
apple-store-badge-with-border.e2593564 (

© 2020 pocketnest