Money Smarts for Your 20s, 30s & 40s, According to a Financial Planner

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In a lot of ways, I'm financially pretty lucky. I've got a stable job, I'm making slow but steady progress on paying down my student loans, and I've gotten started on saving for retirement. And yet sometimes I can't sleep as financial fears swim in my head. Am I saving enough for retirement? What about college for the kids? Do we have enough money in savings? When it comes to worrying about money, I know I'm not alone, as a recent Gallup poll found that over 60 percent of Americans worry about things like retirement and medical bills.


I know money worries are common, especially for women, but how can we face those fears and actually feel good about our financial situations?

I spoke with three women -- one in her 20s, one in her 30s, and one in her 40s -- to find out what they really worry about, and then I asked Wendy Liebowitz, a certified financial planner and vice president of Fidelity Investments, Fort Lauderdale Investor Center, to weigh in with some get-real advice on facing financial fears at any age. 

20-Something Financial Fears 

Laina C. lives in Edina, Minnesota, with her parents. At 26, she is starting her first job with benefits since she graduated from college, but she's afraid she'll never be able to afford living on her own. Laina says, "I have $85,000 in student loans, and I just don't know how I can pay those off and ever start saving to buy a house. I can way too easily imagine still living with my parents when I'm 30, which is just depressing."

According to Wendy Liebowitz, "Laina is facing the same challenges so many recent grads are facing today -- getting a start on a career, figuring out how to save while at the same time paying off student loans and managing other day-to-day expenses, overall just standing on your own two feet! Being smart about your money is so important when you're first starting out ... the next step is to look at her income and expenses and create a practical plan that can be a road map for the future."

In other words, Laina needs a budget. Liebowitz recommends starting with a plan to limit essential expenses like housing, food, transportation, and debt payments (like those pesky student loans) to no more than 50 percent of Laina's take-home pay. With the other 50 percent, she should devote 5 percent to building an emergency savings fund and 15 percent to starting to save for retirement. 

And, yes, even at 26 years old, Laina should be saving for retirement before saving for a house or clearing out those student loans. As Liebowitz notes, "The earlier you start saving, the longer your money has to grow, and your future self will thank you!"

More from CafeMom: 10 Money Questions Every Couple Should Ask One Another

Financial Phobias in Our 30s

For women in their 30s, like me, this decade is all about trying to find some financial balance. Kara G. of Denver, Colorado, is a good example. Kara is 38 years old with two young children. She worries that "there just isn't enough money to go around!" Kara explains, "I'm trying to balance paying for daycare, saving for retirement, finishing off the last of my student loans, and trying to plan for college for the kids. It feels impossible to save for college for them when I am still paying off my own education!"

"Kara's children will have the ability to take out loans for college, or work during college, but Kara may not have the same options in her retirement," says Liebowitz, so she needs to focus on making sure she has an emergency fund and 15 percent of her income going to retirement before she starts saving for the kids' college funds.

When Kara is ready to save for college, Liebowitz suggests looking into a 529 college savings account, which "could be a good option, as it allows savings to be invested and grow, and earnings can be withdrawn federal income tax–free for college expenses when the time comes." Liebowitz continues, "Another way to help grow that college nest egg: Anyone can contribute to a 529 college savings account, so [encourage] grandparents and other friends and family to consider gifting to college as part of a birthday or holiday gift."

Finally, Kara needs to make sure to take time to discuss paying for college with her kids, so they know the importance of maintaining good grades and to expect to have to contribute to the cost of their own educations.

Money Woes in Our 40s

Mary Elizabeth, age 43, of Toledio, Ohio, has the typical fears for those in the so-called "sandwich generation" -- those who are both caring for children and concerned about their aging parents. As Mary Elizabeth explains, "I have four kids still at home and my mother is about to move in with us. I'm about to switch from working full-time to working part-time to help our family with this transition. My husband is the primary breadwinner, but I'm still nervous about what this means for my financial life, especially when it comes to retirement."

When it comes to making big changes to your financial situation, Liebowitz recommends starting by evaluating the family's "financial net worth statement before making decisions that could impact their financial health." She explains: "Specifically, evaluate [your] income, assets, and liabilities each month. If there is a surplus in income, then it could make sense for Mary Elizabeth to reduce her working hours; otherwise, her family should review if it makes financial sense to give up a portion of her income."

Given that Mary Elizabeth has just five years before her first child is ready for college, now might be a tricky time to reduce income and still be able to save for college expenses. Again, Liebowitz reminds us that when it comes to savings, retirement has to come first. "Mary Elizabeth and her husband should prioritize saving for their own retirement now, so they can take advantage of time for compounding growth."

On a final note, Liebowitz says, "Many times women hesitate to ask for financial guidance -- we're all used to multitasking and juggling so many balls in the air on our own. But asking questions is smart, and a professional can help take into consideration their families' priorities both today and into the future -- from how to prioritize debt and saving early on, to strategies for planning and maintaining income in retirement, making savings last, legacy planning, taxes, and other long-term needs."

So, what is the bottom line? When it comes to financial fears, don't be afraid to ask, and when in doubt, always save for retirement!

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