It’s never too early – or too late – to start saving and investing money.
With that said, depending on your age and your financial goals, you might have to make changes to your saving and investment strategies from time to time.
Here are five proven ways to budget your money at any age.
How to budget money when you are in your 20s
If you are in your 20’s, it might be a good idea to follow the 50/30/20 strategy — spend 50% of your income on essential items, 30% of your income on non-essential items, and use 20% of your income to repay your debt and save as much as you can.
Since you are young and do not have any major financial obligations (student loans being the possible exception), you can afford to spend money without worrying too much about your financial future.
At the same time, you should make sure your non-essential expenses do not exceed 30% of your paycheck at any time, for any reason.
How to budget money when you are in your 30s
It is the right time for you to start saving up for retirement. Ideally, you should aim to contribute as much as you are allowed to by the IRS to your retirement accounts.
It is also the right time to reduce your non-essential expenses, as you might have to make major life decisions like getting married, starting a family, and buying a home.
Since you now have dependents, you should increase your life and health insurance coverage substantially to reflect your current needs.
How to budget money when you are in your 40s
These are probably your prime earnings years, so you should make full use of them by investing as much as you can and creating income streams that can supplement your main income.
This is the right time to set up a fund to pay for your children’s tuition.
How to budget money when you are in your 50s
As you get closer to retirement, your primary goal should be to pay off your mortgage and other debts, so that you can enjoy your golden years without worrying about making debt repayments.
This is the time to maximize your retirement account contributions, so that you can build a sufficiently large nest egg.
How to budget money in your retirement
Once you retire, you should take steps to reduce your living expenses to the extent possible so that you can live comfortably within your retirement income.
Make sure you withdraw money from your retirement accounts in a timely manner so that you can avoid paying penalties.
If you are healthy and active, it might not be a bad idea to continue to work on a full-time or part-time basis. Considering the fact that the average life expectancy in the country is 79 years, any additional income you bring in can prevent your nest egg from getting depleted for as long as you live.
More importantly, you should eat healthy, exercise regularly, and stay happy so that you can reduce your medical expenses to the extent you can and enjoy the best years of your life.
