How To Be Financially Smart At Any Age


As you go through the stages of life what it means to be “financially smart” will change. A smart financial move when you’re approaching your 40s is not the same as a smart financial move for a 19-year-old in college. At 40, there are more things to consider when making decisions about your money, such as your spouse, children, mortgage, and greater expenses. Whereas, at 19 most individuals are simply worried about expenses associated with paying for school. No matter what the age, there are steps to follow in order to be financially smart.

College Students and 20-Somethings

As a college student, money can be extremely tight, especially with all the costs associated with attending school and living away from home. By developing a financial plan, you can put more money towards school and less towards things that are not necessities, allowing you to start on a path to financial success right after graduation. Keep up with these financial tips and watch all the money you save!


Save Money

1. Create a budget

Create a spreadsheet, keeping track of all of your monthly bills as well as your monthly income. This includes any steady money that you are receiving each month, including salary, pension, and a spouse’s income, if you’re married. This will help to give you a clear idea of how much is coming in and how much needs to go out. Vow to live within your budget every week, allocating a set amount for each of your necessary costs, i.e. food, gas, entertainment, etc.

There are two types of expenses to be aware of: fixed and flexible. Fixed expenses are debts that do not change from month-to-month (e.g. mortgage, rent, student loans, etc.). Flexible expenses can vary between months (e.g. groceries, entertainments, gifts, etc.), but are an important part of your budget. For your flexible expenses, it’s important to decipher between wants and needs. You want to go to that concert next month, but you need to have enough money to pay your rent.

Add up your income and expenses. Then, subtract your total expenses from your total income. If you get a positive result, then keep doing what you’re doing! However, if your result is negative, then make adjustments to your flexible expenses. The most important aspect of creating a spending plan to remember is that it takes time. Utilize a calendar not only for homework and extracurricular activities but for due dates for monthly bills so that you never miss a financial obligation.

2. Apply for a part-time job/internship

For college students, maintaining a part-time job is a great way to meet your basic financial needs, gain vital career skills, and boost your resume. Colleges are always offering employment opportunities right on campus. The money you earn from a part-time job can go towards your semester bills, drastically decreasing the amount you have to borrow and reducing student loan debt following graduation. It’s a win-win for you!

College internships also offer a plethora of benefits. By participating in an internship, you can not only boost your resume but potentially land a permanent job if you are the right fit for the company. Most internships offer either a stipend or a salary, which can help you pay for your college expenses. Don’t fret if the internship you apply for doesn’t offer to pay you. The experience you gain is invaluable as you approach graduation and begin your job search. Also, having that experience on your resume will speak volumes for your future.

3. Establish a savings plan in order to be financially smart

This can be something small, like say ten dollars a week. You’d be surprised how fast this seemingly small amount can add up. Look at it this way, if you have enough income for entertainment/going out purposes, you make enough money to start building up your savings. This account is your cushion for unexpected expenses, emergencies, and just a general safety net.

Establish Credit

This is the time in your life when you should focus on establishing credit. Trust us, it’ll pay off in the long run. Anytime you apply for a credit card, home or auto loan, purchase a life insurance policy, or even apply for some jobs, credit score information will be required. It’s a major factor in whether a company is willing to lend to you, and what interest rate you will be charged. Check out our credit score guide to determine how to establish credit when starting from scratch. Right now, the biggest things to focus on are paying bills on time and using credit cards responsibly.

Credit cards can be a dangerous piece of plastic in your purse or wallet. All you have to do is swipe your card and you have that new video game that just came out or that new fall wardrobe you’ve been dying for. Not so fast, this may not be a financially smart move. We all know the catch with credit cards-you have to pay back that money, with interest. Did you know that the average undergraduate college student carries $3,200 in credit card debt? In fact, it is common for college students to justify their spending habits using a credit card since they maintain that they will be able to pay it off once they graduate and begin their full-time career. Keep in mind that you most likely will also have student loan debt to pay off after graduation along with other expenses that are unending. If you have to use a credit card, be sure it’s for things you absolutely need, not things you want.

Pay Student Loans

Having ‘good’ credit pays off when it comes time to pay student loans. You have better options for refinancing and consolidation. For an in-depth look, take a look at our student loan guide. When it comes to student loan repayments, figure out when you need to start repayment and how much your monthly bill will be before the first payment is due. This way you can work it into your monthly budget. Set reminders so you are never late on a payment. Or, better yet, sign up for auto-pay. As long as you pay it on time, and pay it in full, you’re good to go.

Parents and Families: Ages 30- to 50-Something

Busy families have a lot on their minds, especially with all the schedules they have to keep up with throughout the year. Sitting down to develop a budget and savings plan for your family may seem like a task that never gets done, however taking the time to make financial goals will have a positive impact on your family.

Continue to Save – In General

This savings plan will be different than the savings plan you followed in your 20s. There are more bills and more expenses, which (hopefully) comes with more income. Create a budget so that you can form a better understanding of how much money is coming in and how much money needs to go out. This will also give you the opportunity to target ways to limit spending each month (i.e. groceries, a special outing with the kids, transportation) so that you aren’t spending aimlessly.

Utilize a budget worksheet so you can clearly outline your monthly bills, making those top priority. Leave yourself enough to allocate to a savings account. After these priority expenditures are accounted for, then you can budget for fun things.

The savings account should also serve as an emergency fund. Saving money for things that may never happen isn’t fun, but it’s smart. Unforeseen disasters can occur, causing severe financial distress. From car repairs to emergency room visits, an emergency fund can prevent major debt. It is recommended to save three to six months’ worth of expenses in order to cover yourself in the off chance that a hefty bill comes your way. Make this process easy on yourself by setting up automatic transfers from your checking account to your savings account. This way, you won’t find yourself changing your mind when you would rather put that money towards something else.

Start Saving for Retirement

A common mistake is that young people are not starting to plan for retirement early enough. Take advantage of the retirement plans offered through your employer, whether you’re fresh out of college, or you’ve been working for years. There are many different types of retirement saving options (IRAs, 401Ks, high yield savings accounts, etc.) to choose from; there’s something for everyone.

The age when you start saving is a factor that you can control. The earlier you start saving, the higher investment returns you will receive. To put it simply, you should start saving for retirement as soon as you can. It’s common to start saving in your 20s or when land your first stable job. Not only does this allow you more time to save, it also gives you more time for your money to grow. Each year, your money “compounds” – the yearly gains your money accrues will generate their own gains the following year, earning interest on your interest. Starting retirement savings early gives you more time for the money in your account to compound.

While planning for retirement, it’s financially smart to make realistic assessments about the life you want to live and about the expenses you will have. Honest estimates will help you figure out how much you will need to live comfortably while retired. The general rule of thumb is to anticipate needing 80% of your pre-retirement income. For example, if you make $60,000 a year, you’ll need $48,000 a year to maintain the same lifestyle in retirement. It’s safe to assume that your monthly social security income, which doesn’t fully kick in until your 66th birthday if you were born between 1943 and 1954, won’t be enough. So, the best thing to do is to plan early and save often.

Another way to roughly calculate your retirement needs is by analyzing your current expenses and estimating how they will change in the future. For example, you won’t be traveling to work, so you can eliminate commuting costs. Or, you may not have car payments anymore, but your health care costs may increase. There are many factors to take into account when it comes to determining your cost of living in retirement. If you can, include an extra cushion for emergency expenses. Research shows most Americans don’t save anywhere near enough to maintain a comfortable lifestyle in their later years.

Invest in Other Ways

Investing is a way to make money, but only if done right. You can invest in stocks, bonds, mutual funds, real estate, or your own small business. Any of these options will reach the goal of generating more money. This money can be used as another source of income that can go toward paying off debt or building your retirement savings.

Pay Off Debt – Credit Cards, Cars, Student Loans, and Mortgages

Debt tends to linger over your head like a dark cloud. The good thing is that it doesn’t have to be a permanent fixture. Instead of making unrealistic resolutions for yourself such as “completely get out of debt,” vow to pay more towards your debt than usual. Plan to put $150 towards credit card bills monthly, focusing first on the cards that carry the highest interest rate, so you can pay them off faster.

The average household carries over $15,609 credit card debt, $156,706 in mortgage debt, and $35,000 in student loan debt. Understandably, this doesn’t always correlate with irresponsible spending. Oftentimes, unplanned expenses wind up on credit cards, which is why an emergency fund can be helpful. Less debt means more money available to your family for fun activities throughout the year.

Your 60s: Retirement and Beyond

Continue to Practice Smart Spending Habits

Create a retirement budget just like you did in previous years. This will help you determine when you can actually retire. If you stick to your savings plan and budget, you can retire exactly when you want to. This retirement blog tells you all you need to know about 401(K)s and IRAs and what to do with them when you’re ready. At this stage of life, your investments, retirement savings accounts, and social security all come into play. But remember, if you can put off collecting social security until 70, you will receive larger monthly payments.

Sell Unneeded Assets

Selling unneeded assets can help you reach your retirement goal sooner. By selling these assets you can make a profit and even help with reducing debt. That jewelry gathering dust in your jewelry box could now be worth more than you ever imagined. So could that classic car in the garage. Selling unneeded assets may also mean downsizing your home. You may not need as much space as you once did. Downsizing can often come with a profit and lower your monthly expenses.

Selling unneeded assets may also mean downsizing your home. You may not need as much space as you once did. Downsizing can often come with a profit and lower your monthly expenses.

Have Fun

Some say your life doesn’t even begin until retirement. These are your golden years. Have fun, and cross off those bucket list items you’ve always wanted to do.


Have any other tips and tricks to be financially smart? Or, do you have any further financial questions for a specific stage of life? We’d love to help! Ask your question in the comments section below.

Kara Vincent
Kara Vincent

Kara Vincent is the Financial Officer at Lancaster Red Rose Credit Union.