Smart money moves | Rossi

Life is a journey filled with financial choices that ultimately shape your future. While money may be important to many, it is simply a tool to help people focus on the things that mean most to them. Spending time with family and friends, pursuing goals and hobbies, developing yourself and having the time and financial resources to help others may all be benefits that come from making the right money moves at the right time in life. Like the seasons, there are specific things to consider implementing at different times and other pitfalls to avoid. This is the first of a two-part series on the financial moves that should be considered at various pivotal points in your life.

20s

Moves to make: Believe it or not, one of the most powerful financial moves that can be made in your twenties is to start saving for retirement. From taking full advantage of a 401(k) match at a first job after college to socking away money in a versatile Roth IRA (up to $10,000 may also be used for a first time home purchase), developing a save for the future mentality at this age is critical.

Moves to avoid: It is not a good idea to develop a pay in the future mentality during this period. The 20s can be a time when poor spending and credit habits are developed, often leading to sizable credit card and student loan debt. Yes, developing credit is important but the key is to do it in a responsible way. Utilizing secured credit cards that require you to have a balance in the bank that is equal to your spending limit is a great way to put a lid on out of control spending.

Bottom line: Rather than allowing the 20s to be a time when you start out by digging yourself in a hole, use it as a time to jump-start your future.

30s

Moves to make: The 30s are often a time when new families begin. Marriages, children and major home purchases often occur during this time and represent significant financial responsibilities. With financial responsibility also comes risk, making life insurance an important consideration during these years. Since life insurance is cheaper the younger and healthier you are, the 30s are often a fantastic time to establish coverage outside of an employer. Remember, statistics show that most of us will jump between jobs and you cant depend on each new employer to offer coverage. Locking up coverage with a 30 year term policy can be a great way to protect your family in a way that is independent of your job. Assets and responsibility also necessitate the need to contact your attorney to discuss wills, guardianship for children, powers of attorney and living wills.

Moves to avoid: Purchasing more home than you can afford is often a major issue during the 30s as it may compromise your ability to increase retirement savings, establish education funds for children and can also lead to ballooning credit card debt.

Bottom line: Rather than allowing the new financial responsibilities of the 30s to overwhelm you, begin by taking a systematic approach to addressing all of the new goals on the table.

40s

Moves to make: The 40s are often a time when career momentum builds and the financial rewards begin to increase. Career development may begin to pay off with higher salaries and benefits. The 40s are also a time when it is important to realize you may only be twenty years off from retirement, making this an important time to capture that higher income and double down on retirement savings. Financial trickery may help – Consider pretending that your raise never happened and dump the extra income right back into your retirement account. Remember, saving the maximum amount in a retirement plan does not mean that you will be on track for your goals. Instead, consider developing your own plan, tailored to meet your personal needs.

Moves to avoid: If you have children, college expenses can be a cause for concern during this phase. Too often, parents choose to make unrealistic commitments to paying college costs that ultimately end up pushing retirement dates back by decades. It is important to remember that children have many years of earning potential ahead of them while the parent does not. Do not allow college funding to compromise retirement and try to avoid refinancing your home to pay for it.

Bottom line: Making poor financial choices in your 40s often leads to trying to play catch up in your 50s. Maxing out retirement savings with increased levels of income while limiting the education costs to what you can truly afford may help you build momentum as you move into your 50s.

As you can see, your life is more than just numbers. In the next installment we will discuss the 50s and beyond. True Financial Life Planning is a process designed to advise you at the intersection of your money and your life, helping you to pursue your unique goals during different phases of your life. Consider speaking to someone who specializes in this unique process as it may help you bring financial clarity to your life. Since everyones situation is unique, consider speaking to your financial advisor to determine the most appropriate approach for you.

Kurt J. Rossi, MBA is a Certified Financial Planner Practitioner amp; Wealth Advisor. He can be reached for questions at 732-280-7550,kurt.rossi@Independentwm.com,www.Independentwm.com,andwww.bringyourfinancestolife.com- LPL Financial Member FINRA/SIPC.

Follow NJ.com on Twitter@njdotcom. FindNJ.com on Facebook.