Here at Ellevest, women ask us a lot: “What should I be doing with my money right now?” (Good question.) Of course, you’re you … and your financial situation is different from your sister’s, and your mom’s, and your friend’s, and your partner’s. But when we surveyed 1,000 women* to ask them about their money habits and goals, we found that their age often correlated with certain life and career stages.
So the advice below is organized by decade — but there’s no black and white when it comes to money management. It’s not about where you are today … it’s about where you’re going. So if your experiences don’t really fit with the timeline below, that’s not a big deal. You can look forward or backward to find the advice that feels most relevant to where you are right now.
7 smart money moves to make in your 20s
OK, let’s do this. First, sit down and figure how much money you have coming in and how much is going out. (In your 20s, there’s often not as much, so it’s key to keep track.) We recommend following the 50/30/20 rule as a high-level, easy-to-use budgeting guideline.
Get that employer match. If your employer offers a 401(k) contribution match, take full advantage of it. That’s free money, people.
Start saving for emergencies. Our advice used to be “deal with debt first, then build savings.” But times have changed, and the research shows that having a small cash cushion is the way to go. So these days we recommend giving yourself a little bit of savings for a rainy day before you start paying down expensive debt. One month’s take-home pay is ideal, so you can rest easy knowing you’ll be able to tackle a bill here and there if you need to.
Pay off high-interest debt. 74% of women in their 20s told us that they have debt, and 41% said their debt has a high interest rate. Work on paying it off, including both credit card debt and student loans. Focus most heavily on the debt with interest rates of 10% or higher.
Finish that emergency fund and tackle medium-interest debt. Once you’re free of those costly interest payments, it’s time to reinforce that safety net. Three to six months’ worth of take-home pay — in its own FDIC-insured bank account, one you can access fairly easily if and when you need to — is the target range you should be shooting for. (Where you land in that range depends on your risk potential.) Then (or concurrently), go back and tackle your medium-interest debt (between 5% and 10%).
Get renters insurance. Not only does renters insurance pay to replace your stuff if something happens (like a fire, or a burst water pipe that floods your apartment), but it often also covers things like theft and the cost for you to stay somewhere else if your apartment is temporarily out of commission. It doesn’t cost very much (the average is $15/month), and you’ll be glad for it if you need it.
Make sure you have disability insurance. The Social Security Administration says that 25% of 20-year-olds will become disabled for some period of time before they retire. Disability insurance protects your earning power.
Invest what you can toward retirement. If you can afford to put in more in your retirement account, do that — a dollar in your 20s can be worth a lot more than a dollar invested later on thanks to the magic of compound returns.
Read more about what to do in your 20s here.
5 smart money moves to make in your 30s
Build a foundation. If you have high-interest debt, or if you don’t have a full emergency fund saved up, those are going to be your first steps.
Get on track for retirement. Once you have that solid base established, make sure you’re investing enough to be fully on track for the retirement you want.
Get ready for homeownership. 56% of women in their 30s told us they’d either just bought a house or see it as a priority. Before you pass “go,” make sure buying is the best money move for you. Then start investing for a 20% down payment, which is the gold standard for several reasons. Have enough set aside for closing costs, too (2–5% of the home’s purchase price). And once you are in that dream house, we recommend setting aside 1% of your home’s value each year for maintenance costs.
Prepare for kids and the cost of having them. 49% of women in their 30s also told us that they have kids, and 15% said having kids is a priority. If you’re thinking of having kids soon, it’s a good move to prepare financially for any planned career breaks … because they can be hella expensive. Then, once kids are here, they come with lots of costs, including — in many cases — college. If so, consider investing in a 529 college savings plan. (But don’t do that instead of saving for retirement. Student loans exist, but retirement loans don’t.) Also, kids are a good reason to get term life insurance and put a will and power of attorney into place, if you haven’t already.
Invest toward your goals. Think about the things you might want next in life. Start your own business? Buy that speedboat so you can take the kids tubing? Get a condo in your favorite vaca spot? Start investing as much as you can toward those goals.
Read more about what to do in your 30s here.
5 smart money moves to make in your 40s
Zero in on retirement. 71% of women in their 40s told us they were saving for retirement. Niiiice. Check in with your goals and progress, and make any adjustments as necessary.
Put cost savings to use. For example, if you did have kids in your 30s, they might be off to school soon … which could mean less to pay for childcare. If that’s you, put those savings toward retirement or your other investing goals. Also, while some lifestyle creep is natural (and well deserved), just keep an eye on it so that it doesn’t put the hurt on Future You.
Protect your #1 most valuable asset. That’s you and your earning power. Get supplemental life and disability insurance if you don’t already have it (and lock in those rates now), especially if you have other people depending on your income. “Supplemental” means not through your employer — something you can take with you when you change jobs or retire. Also, did you know that women’s salaries are most likely to peak when they’re in their 40s … while men’s salaries keep growing into their 50s? True, sad story. Take steps to help it continue to grow, like enrolling in courses to keep your skills sharp and negotiating hard to get paid what you’re worth.
Talk money with your parents. It’s a good time to talk to your parents about their money plans as they enter their retirement. Is their house paid off? Do they have all the various insurance policies? Will they need your help?
Grow your net worth. Women in their 40s were most likely to tell us that investing to grow their net worth was a priority. Yes, do it. We’re all about women building wealth.
Read more about what to do in your 40s here.
5 smart money moves to make in your 50s
Talk through it. Women over 50 were most likely to tell us that they never talk to anyone about financial advice. That’s, ummmm ... suboptimal. When you’re 50, you can start taking advantage of catch-up contributions into 401(k)s and IRAs. Find financial help you can trust to help you make sure that a) you know your number for retirement and b) you’re on track to get there.
Keep going with cost savings. Maybe this is the decade the kids leave the nest and you can invest what you used to spend on their expenses. You might also think about downsizing a little, depending on your goals and lifestyle, and dropping some of your more expensive life insurance policies — fewer people are relying on your income now.
Look into long-term care insurance. Unless your financial assets are below $200,000 (in which case Medicaid may be better) or above $2.5 million (in which case self-funding may be better), don’t wait and risk higher premiums … or even ineligibility.
Get serious about estate planning. Now’s the time for you to make sure you have an updated will, power of attorney, living will, medical power of attorney, and any investing vehicles (like a trust) that your financial planner suggests.
Step on the gas in your career. 61% of women over 50 told us they describe themselves as ambitious. If that’s you, go for it — whatever that means to you. People are more likely to see mature women as reliable leaders, so there’s no reason for you to slow down just yet (or ever, if you don’t want to).
Read more about what to do in your 50s here.
4 smart money moves to make in your 60s and beyond
Manage your retirement accounts. Now’s the time to work with a financial advisor who can help you figure out the best way to consolidate your retirement accounts (or not) to get them ready for withdrawals.
Give your retirement a practice run. Spend a couple months living on the income you have planned for your retirement, and invest the rest. Or maybe even take a month or two off from work (if you can swing it) to see if you’ll actually enjoy doing the things you plan to do (because sitting on a beach is great for a week, but it might get old after 25 years).
Invest for what’s next. There’s nothing to stop you from continuing to invest for things like that vacation home you’ve had your eye on, or that dream cruise around the world. Or from just continuing to build wealth.
Plan your legacy. Speaking of your wealth, now’s also the time to get serious about your legacy. Do you have all the estate planning tools your financial advisor suggests, like wills and trusts? Do you have a plan for what you want your money to do when you’re done with it? Will it go to family? To that nonprofit you’ve been supporting for years? What giving vehicles, like funds or trusts, do you need?
Read more about what to do in your 60s here.
And then … get out there and live your best retired life. (Or not-retired life, or sort-of-retired life, if that’s your thing.) You’ve earned it.