Money Rules for Every Stage of Life

  • You’ll be managing money your entire life—it’s imperative to follow some rules along the way
  • Lay a foundation in your 20s, ensure you’re being paid what you’re worth in your 30s, finish paying your loans in your 40s, and get serious about estate planning in your 50s
  • The point of money rules and management is to make life comfortable and secure

For better or for worse, money is important. It will be important to you for your entire life, so you should take it—and planning—seriously from the time you begin working and paying bills.

Of course, everyone should always save, but there are some money moves you should make and money rules you should remember at every stage of life.

Your 20s

Your 20s are important for laying a foundation for your future. This is the time to create good habits and avoid getting into debt. Now, things work a little differently for lawyers—you spend more years living the poor student life while your friends are already earning money, saving for retirement, and eyeing a home purchase. When you do start working, you immediately have to figure out how to pay a gigantic law school loan bill every month. So you may not have as much of your 20s to work with, but you can still get started.

  • Create a simple budget and make sticking to it part of your routine.
  • As soon as a 401(k) is available to you, take advantage of it. Dedicate at least enough to receive the company match, and much more if you can.
  • Avoid adding to your debt.
  • Save—it’s ok if you’re only able to save a little, as long as you save something.
  • If you’re in a serious relationship, get comfortable discussing money and ensuring you’re on the same page.

Your 30s

Your 30s are when you’ll (hopefully) start climbing the ladder and earning more. You will likely change jobs and should better know exactly what you want and where you want to be. You may buy a home, you may be considering children. Whatever your goals, now is the time to buckle down and focus on them.

  • Your 401(k) goal should be to contribute 15% of your salary.
  • Are you getting paid what you’re worth? Your salary now could have long-lasting effects on your earning power.
  • If you have children, start a college fund as soon as possible.
  • Your emergency savings fund should cover three to six months of expenses.
  • As you get close to 40, ask yourself: Are you properly insured? You don’t only need life insurance—consider disability insurance, which can help you and your family stay afloat in the event of an accident that leaves you unable to work for a while.

Your 40s

The 40s are when people either hit their stride and reach some of the biggest successes of their careers—or decide to change focus. You might move from a bigger firm to a smaller one or go in-house. You might decide to hang up your lawyer hat altogether and start your own business. Whatever your choices, remember that retirement is always on the horizon, which means you must make a pledge to be careful with your future.

  • Don’t neglect or raid your retirement to fund college for your kids.
  • Get serious about home maintenance. Future You will thank you.
  • Raise your retirement contribution with every pay raise.
  • Talk about money with your parents, and what their plans are for long-term care as they age. Will they need to live with you? Have they documented their wishes and plans?
Have you had a conversation about money with your parents? How do you envision your life and theirs as they age? Have they communicated any plans to you–moving to a warm climate, downsizing, moving closer to the grandkids? What are your concerns about the future?
  • If all has gone well, you should be able to pay off your law school debt in this decade.

Your 50s

The 50s are the decade of happiness for many people. Retirement is very close now, and you’ll need to plan accordingly. Hopefully, you have zero debt and ample savings.

  • Get serious about estate planning if you haven’t already. You should have an updated will, power of attorney, living will, medical power of attorney, and possibly a trust. Your financial planner can help you.
  • Now is the time to consider long-term care insurance.
  • Take advantage of catch-up contributions to your 401(k) and IRA.
  • Get more specific about what you expect from retirement, if you haven’t already. What does your transition plan look like? Do you plan to downsize? Do you plan to travel?
  • If you can pay off your mortgage, go for it.

Remember: Financial planning is a lifelong endeavor, and the point is to make life comfortable and secure, not to constrain. Don’t forget to include hobbies, vacations, and general fun in your budget. Working within your budget, having goals, and staying focused will serve you well in every decade—just follow the rules.