Written by Cathie Ericson
Published Apr 02 | 12 minute read
You may have heard that it's never too early to start investing. That's true—but it's also never too late to start saving. And if you're like most Americans, you probably have room to improve. In fact, after the savings highs achieved during the pandemic, our saving rate is on a decline.1
Fortunately, wherever you are on your life (and savings!) journey, it's always the right time to boost your bottom line. Here, we offer tips for how and why to save over the decades. Your reward? Improved peace of mind and financial security.
Twentysomethings are bursting into their “real" adult life: starting a career, exploring relationships and identifying their authentic self. As you forge your own path, do some soul-searching to plan for what you want that to look like—today and in the future.
Most twentysomethings don't have a host of commitments, creating an ideal opportunity to build a savings foundation while your life is your own. With fewer obligations, set some short-term goals for what you want to accomplish or experience during this exciting discovery period.
Keep in mind, however, that as a career newbie, your bank account might be a little bleak. So it's a good idea to set aside an emergency fund to cover unexpected bills or a job layoff. Start by making a budget that covers essentials (housing, utilities, insurance, etc.) and savings, and then you'll know how much fun money you can spend guilt-free.
In your 30s, you're likely zeroing in on a clearer view of your values and priorities. You might have found a partner or decided to remain happily single. At this stage, many people start getting serious about whether they want to have kids—or maybe lean into being a pet parent.
During this decade, focus on establishing a secure financial foundation, no matter what your situation. If you decide to start a family, adapt your lifestyle to support new and often costly expenses. One or both partners might need to downshift their career, at least temporarily, which means you'll want to build up a cushion to support that decision. Work on designing a new budget to see how it will flex with new commitments.
The 40s are often considered the busiest decade. You're probably hitting your stride in your career and might have an active family to oversee.
Your day-to-day budget might feel strained by competing needs (Diapers! Childcare! Vacations! Music lessons!), but you also are likely climbing the career ladder and significantly increasing your earning power. This is a logical point to revisit your budget and rework your allocations. Your 40s are also a great time to prioritize retirement planning so your money has sufficient opportunity to grow.
If you raised a family, they've likely started their own lives and you're enjoying the well-earned slower pace of an empty nest. That gives you the chance to explore new hobbies and consider how you want to live this next chapter. Often the 50s involve reinvention, both in your career and your relationships.
During your 50s, concentrate on paying down debt and saving for the future. Review your budget and consider ways to reduce expenses as you choose new financial milestones for the near term, whether it's rebuilding a travel fund or pursuing a new hobby.
As you ease into your 60s, you're likely thinking about retiring, or at least tempering your work obligations. You might have more leisure time to focus on new relationships (or rekindle old ones) and figure out who you want to be for the rest of your life.
Though you may no longer be working, your money can still be working for you. Keep saving to help it work even harder. For those still earning, continuing to save can boost your accounts so you can potentially look forward to retiring at an earlier age. You might even choose a side hustle to earn a little extra cash doing something you enjoy. Dedicate those dollars to paying down debt, or direct them toward an enriching activity or adventure you've always wanted to take.
At every age, saving money is a critical part of a healthy financial future. The building blocks at each stage are similar: Set achievable goals, create a realistic budget that fits your age and stage and automate your savings. Taking advantage of various savings and investment vehicles at different points of your financial journey can help keep your path solid. With the right plan, you can start saving money today and give yourself the security you need for a better tomorrow.
READ MORE: What Is the Average American Debt by Age?
Cathie Ericson is an Oregon-based freelance writer who covers personal finance, real estate and education, among other topics. Her work has appeared in a wide range of publications and websites, including U.S. News & World Report, MSN, Business Insider, Yahoo Finance, MarketWatch, Fast Company, Realtor.com and more.
1. "Excess Savings during the COVID-19 Pandemic." FederalReserve.gov. October 21, 2022. 2. "What Is the Average Stock Market Return?" NerdWallet.com. December 8, 2022. 3. "What is Fee-Only Financial Planning?" NAPFA.com. 4. “Families can make a tax-free rollover from 529 plans to Roth individual retirement accounts starting in 2024." CNBC.com. December 23, 2022. 5. “Taxpayers should review the 401(k) and IRA limit increases for 2023. IRS.gov. November 21, 2022. 6. "When to Start Receiving Retirement Benefits." SSA.gov. January 2023.