5 Financial Goals to Reach Before Age 40

January 15, 2020
coins and glass jar

Financial Goals for Your 20s and 30s

1. Create and stick to a budget.

It’s hard to save if you have no idea where your money is going and how much you are able to contribute to retirement funds. Create and stick to a budget that allows you to cover necessary expenses while saving for your future. In your 20s, you should be aiming to save at least 10% for retirement, if not more. As you grow older and your salary increases, this number should also increase over time to meet your financial goals for retirement.

TIP: Work with an investment advisor to set a realistic budget.

Working with an independent financial advisor who can help you create a budget which includes a reasonable and realistic savings percentage can help you understand how much you should be spending if you want to meet your retirement goals. We recommend using an independent advisor who does not receive a commission for recommending specific investment opportunities who is first and foremost concerned with your retirement options.

person holding smart phoneTIP: Use budget apps to set goals and track spending.

If you’re having trouble staying accountable to a budget, consider utilizing technology that enables you to help identify areas where you may be spending more than you realize. There are a variety of smartphone apps and budgeting tools available that can track your spending and notify you of high rates of spending on various levels, such as dining out, online shopping, etc. Turns out you may be spending more at Starbucks than you realize.

What should your budget look like in your 20s and 30s?

Here’s a breakdown of what most financial advisors will recommend for a typical budget of a millenial hoping to save for retirement. What should you be spending on rent, mortgage, groceries, and other expenses per month?

  • Bills + Recurring Expenses: 20%
  • Mortgage / Rent: 20%
  • Food + Groceries: 20%
  • Retirement: 20%
  • Donations: 10%
  • Transportation: 10%

2. Create an established credit history.

By the age of 40, you should have a healthy credit score and a credit report free from bankruptcies, liens, and other negative marks. This significantly increases your chances of finding loans with lower interest rates, which can help you save money in the long run which can be put towards your retirement. There are a few ways to achieve an excellent credit score.

TIP: Make payments on time.

Late payments are one of the worst ways to ruin your credit. This indicates to creditors that you are an irresponsible lender. This can impact your ability to find home loans, auto loans, credit cards, and more. If possible, set up automatic recurring payments do prevent missed or late payments. If possible, schedule automatic payments throughout the month so as not to front load withdrawals at the same time each month.

TIP: Don’t over-utilize available credit.

Smart spenders and savers know how to make the most of a credit card without using too much credit at any given time. Using too much of your available credit is another indication to lenders that you are not an ideal investment on their end. If, for example, a credit card has a limit of $20,000, you should aim to have a balance of 10% or less at all times that you consistently pay off. 

TIP: Make more than the minimum payment when possible.

When you’re able, you should make more than the minimum payment on any account. Alternatively, consider adding more to your savings if you can spare it. While it may be tempting to save for a vacation with extra income, paying off debts and saving for retirement are smart habits that can help you prepare for a financially secure future that allows you to enjoy life on your own terms.

person holding credit cardTIP: Choose credit cards that offer interest free rates or rewards you’ll actually use.

When and if you need to apply for a credit card, choose those that offer interest free rates and rewards that can actually put money back in your pocket if used wisely. For example, if you eat out often, utilize credit cards that offer cash back rewards on restaurants and dining out. Many credit card companies also offer incentives on common purchases throughout the year that you can and should take advantage of when available, including:

  • Gas
  • Groceries
  • Travel Purchases
  • Shopping
  • More

3. Get rid of the YOLO fund.

In our culture, it’s easy to convince yourself that you deserve a vacation, and sure, a weeklong trip to the beach is great, but so is being financially secure when you retire. While we don’t want to discourage rewarding yourself and living comfortably, the reality is that by the age of 40, you should have a budget you are sticking to, you should be saving for the future, and you should be spending wisely. 

woman looking at phoneTIP: Track your spending.

Tracking how much you’re spending can provide insight into how much you may be overspending in certain areas without even realizing it. If you’re saving for a renovation project, retirement, a vacation, or any other purchase, you’ll likely want to cut back on unnecessary spending, and that begins with the YOLO fund and purchases such as clothing, vacations, etc. Trust us, your future self will thank you for spending and saving wisely.

4. Pay off student loans, or have a plan to pay them off as soon as possible.

Aside from mortgages and auto loans, student loan debt is one of the largest types of debt most individuals in their 20s and 30s will encounter. Ideally, these will be paid off by the age of 40. What are some ways individuals can accomplish this? Cut unnecessary spending and make plans to pay off debts as soon as possible. 

piggy bank5. Plan seriously for retirement.

Waiting until your 40s or 50s to begin saving for retirement is dangerous, because the less time you have to save for retirement, the less funds you’ll have to cover the cost of living expenses, medical bills, and more. If you begin saving early, you’ll significantly increase your chances of being prepared for retirement at an earlier age. If you choose to invest wisely with the help of an independent investment advisor, you can also significantly increase your gains from retirement investments. Along with smart spending, this is the smartest way to plan for retirement.


ERISA is unique as an independent retirement investment agency located in Nashville that works with individuals and corporate organizations around the world. Our unbiased team of investment advisors do not receive a commission on investments and can work with you to choose the retirement plan which works best for you. 

Ready to work with a team of professionals who can help you find the retirement plan that’s ideal for you? Contact us today to get started.


By Chandler Julian, CPA, QKA, AIF

Chandler serves as the firm's Chief Financial Officer.

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