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Financial wellness

The Definitive Guide to Building Wealth One Decade at a Time

Author:NeuroGym Team

To survive in this world, you need money, but building wealth doesn’t have to be a challenge.

Learn how to get the most out of your money and become financially secure by using our guide that breaks it down decade by decade.

Your Twenties: Laying a Financial Foundation

What a time to start looking after your finances! Your 20s are the ideal time to lay a foundation for financial security that can set you up for life.

Set Up an Emergency Fund

Start by establishing an emergency fund that acts as a backup if you were to land in financial trouble. The goal should be to save enough money to cover all your expenses for three to six months if you receive the same amount of money each month. If your income varies (like when you receive a commission in a sales job), then you want to create an emergency fund covering up to a year’s expenses.

Think About Retirement

Contact your financial institution to open a Roth IRA account that allows you to save for your retirement. It is an individual account with tax benefits and a maximum contribution limit of $6,000 in 2021.

Your employer may contribute to a 401(k) account for you, and you are allowed to add funds into it, too. First, max out the Roth IRA account, then push more money to your 401(k).

Get Insurance

Obtain asset (automotive and home) insurance as well as disability coverage. Health problems and accidents can happen at any moment, so you want to be financially secure without using up your savings.

Your Thirties: Getting Serious About Money

You’ve worked for a couple of years by now, and you may have had raises in your income. It’s possible that you are spending more which puts you at risk of lifestyle creep.

Your 30s will be the time to get a bit more serious about building wealth—especially as you enter a new season in life that can hold great change in health and happiness.

Improve Your Investments

Use extra money toward your 401(k) or Roth IRA account. Generally, you should allocate 10% of your total income to retirement contributions.

Once you contribute the maximum amount, you can diversify your portfolio by trading in stocks and bonds. These types of investments bring in a greater return than typical savings accounts.

Consider Love

You could be in a serious relationship, and love will affect your financial situation. It’s possible that you will get married, have children, or buy a house.

Consider having a slightly less risky investment portfolio, as you have other people relying on your money, too. It is best to stay away from stocks, but a money market account can still provide a good return.

Organize Life Insurance

A partner or children must always be considered when you are planning your finances. They are dependent on your money (especially children), so purchase life insurance to provide security to your loved ones.

Fear to Fuel

Life can be scary. Add finances to the equation, and it’s no wonder that people struggle with fear and anxiety.

Don’t let fear get the better of you; instead, use it as fuel!

Sign up now for our webinar where you will learn how to win the game of fear.

Your Forties: A Balancing Act

In your 40s, you could be in a stable job and get a good income, yet this decade can be one that requires intricate financial balance.

Everyone Needs a Cut

Beating the budget is what the 40s is all about since everyone wants something from you. You have your general household expenses plus a whole lot extra.

If you have children, then you need to consider how you can save for their college education. Only save this money if you can afford it. There are always options like student loans to pay for college, which is something you can’t get for your retirement.

Review your parent’s financial situation at this stage, too. They may not have sufficient money to look after themselves or their health, and they may rely on you to help them. It is better to be prepared for this expense than have it come by unexpectedly.

Supersize Your Retirement Annuity

Put more money toward your retirement during this decade, especially since you are earning more now than ever before. Generally speaking, about 15 to 20% of your total income should be going toward your retirement funds.

Start a Side Hustle

At this age, you might feel your income is lacking, even if it is high. You could also be worried that you might not find another job if you lost yours for some reason. This is where a Plan B comes into the picture.

Start thinking about how you could add a second or multiple income streams. Additional funds can boost your retirement savings or help with covering the costs associated with other family members.

Your Fifties: Preparing for the Future

In your 50s, you have to take actionable steps to ensure you are financially set for your retirement. You could be retiring in the next decade, so you have to be ready for it.

Review Your Spending

It is advisable to contact a financial planner at this stage—even if it’s just an hourly one—that can review your current financial situation. They will give you an indication of whether your money will be enough for retirement.

Use this information to plan for the rest of the decade. Identify any expenses that you can decrease and put that money toward savings. You can also ask the advisor how to invest your money to get the maximum return during your retirement years.

Boost Your 401(k) and Roth IRA

You can invest additional amounts into both your 401(k) and Roth IRA accounts as soon as you turn 50. These contributions allow you to save more for your retirement, but there is an annual cap on what you can invest into them.

Balance Your Investment Portfolio

Less risky investments are best, as you don’t have as much time to recover from market upsets. Invest more in fixed income options, such as bonds, instead of riskier investments like stocks.

Consider Alternative Investments

If you have a side hustle, you could add more money to it for expansion or boost marketing to increase your potential income. You could also invest in property or start-up businesses. Both of these are lucrative income opportunities, but always do your research to ensure it is the right option for you.

Face Your Fears

The prospect of retirement is daunting for many, but it doesn’t have to be for you. Prepare yourself for the challenges ahead and approach them with confidence by joining us for a virtual webinar where we teach you to turn fear into fuel.

Sixty Plus: Making Money Work for You

Retirement awaits you, but don’t stress about your finances. You have built your wealth over many decades, so now, your focus is on distributing your money in the best way possible.

Create a Financial Strategy for Retirement

Review your budget and compare it with your projected income and expenses from your various income streams. Plan on how you can distribute your income and allocate assets in the least risky way possible.

Consider investing in municipal bonds, as they are generally tax-free. Balance out your current investment portfolio and plan on how you might sell them if you need the extra money.

The Right Time for Social Security

Social Security benefits can be of great financial assistance. You can apply for them from the age of 62, although you will only get the full benefits from the age of 67.

The best option, if you can wait until then, is to delay your application until 70, as you will get a better income return. Currently, you can count on an 8% return for each year you wait.

Consider Your Health

At this age, you may have some health concerns, and these can be costly. Make use of medical benefits offered by the government to help cover health care costs. Alternatively, plan on how you can use your current income to pay for medical expenses.

One option is to use your Social Security benefits. If you are married, then put in one partner’s claim earlier and let the other one’s grow for a couple more years.

Building Wealth Is a Priority

Financial security must be a priority at every stage in your life.

If you are like many other people, then you might be stressing that you don’t know how to work with money. The truth is you know how to do it, just like with many things in life, but many people never take action.

In this guide, we have given you that action plan. All you need to do is make financial wellness a habit. You have to train yourself to build good habits that lead to success.

We’ve made that easier for you, too! Register now for free training to overcome fear and get more done by creating habits. It’s free so there’s no excuse for missing it.

About The Author

NeuroGym Team

NeuroGym Team: NeuroGym’s Team of experts consists of neuroscientists, researchers, and staff who are enthusiasts in their fields. The team is committed to making a difference in the lives of others by sharing the latest scientific findings to help you change your life by understanding and using the mindset, skill set and action set to change your brain.

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