Start by considering every decade of your life, as compounding seasons that lead to wealth. While stock market volatility, unemployment numbers, and CPI aren’t at the top of the societal conversation, they are important context clues on managing your money. If financial experts say that we are heading toward a downturn, it should be a mental note about your savings or lack thereof. When times are great, that’s where you should plan for when times aren’t. This doesn’t imply that you can’t enjoy the moment, however, it’s a reminder that all good things may not last forever.

With the possibility of recession looming, instead of being anxious, consider your time horizon. While downturns come and go, the longer you invest, the better your chances are for success. In contrast, if your time horizon is shorter, the more likely you need to have a rollover plan to avoid liquidating your funds too early. Whether you are just starting your career in 2024, are middle-aged, or are nearing retirement in 2024, building wealth is an accumulation of a lifetime of lessons.

“We can’t predict the future, but by thoughtful spending and saving throughout your lifespan, you can create financial peace and resiliency for whatever the world and markets throw your way,” said certified financial planner Carolyn McClanahan, an M.D. and founder and director of financial planning at Life Planning Partners in Jacksonville, Florida.

Of course, here’s a decade-by-decade cheat sheet for growing your money, engaging with opportunities, and enjoying your life.

Kicking off in your 20s. Starting on the Path of Wealth

The first thing to do is make sure you have enough cash stashed away for an emergency. If your job is secure, set a savings goal of three to six months’ worth of expenses. If it is insecure, such as a commission-based sales job, strive for six to 12 months, said McClanahan, a member of CNBC’s Advisor Council.

You should also start planning for retirement. If your employer has a 401(k) plan and offers a match, contribute enough to get that match.

After that, open a Roth individual retirement account, if your income qualifies, McClanahan said. You can contribute a maximum of $6,500 in 2024. Then, if you still have money to invest after maxing out your Roth, contribute more to your 401(k) plan, she said. In 2024, you can put as much as $22,500 into the account.

When it comes to the balance of your portfolio, you can have more equities than fixed income since you have more time to recover from any down markets.

In addition, make sure you are insured appropriately, especially with auto and disability insurance, since one accident or health issue could wipe out any savings you may have.

This is also a good time to take on a side hustle, said Alainta Alcin, co-host of the Financial Griot, based in Florida.

“It may not be generating a lot of income, but it is something they can create more income from,” she said.

Building Wealth through the Messy 30s

As your career grows and you begin to earn a higher salary, don’t fall victim to the “lifestyle creep” and start spending that newfound money, warned Lovely Merdelus, Co-Host of the Financial Griot.

Instead, put that extra money into your 401(k) plan.

The rule of thumb is to put aside about 10% of your income if you start young, but a financial professional can help you work out the numbers, he said.

After you max out those contributions, start investing outside of your retirement account. Your portfolio should be diversified, with a mix of stocks and bonds.

You may also be thinking about buying a house, getting married or having children.

CFP Elaine King strongly recommends considering a home purchase in your 30s. It’s OK to start small, she said.

“It doesn’t need to be a big house, just something that in your future can be your rental income to diversify your assets,” said King, founder of Family and Money Matters in North Miami, Florida.

When you start saving for those events, don’t invest in stocks — unless your time horizon is longer than five years, McClanahan advised.

Instead, she recommends a money market account. These days, money market fund rates have soared as the U.S. Federal Reserve hiked interest rates. The average yield on Crane Data’s list of the 100 largest taxable money funds is 4.62%. Similarly, certificates of deposits, or CDs, have also seen their interest rates rise.

If anyone is counting on your income, such as a spouse or child, it’s also time to buy life insurance. For those with kids, you may want to start putting money aside for college.

Consolidating Wealth through the Go-Go 40s

You may now be in your peak earning years and may also be raising children.

If possible, try to start a college savings account if you haven’t done so already. If you can’t afford to, don’t divert savings from your retirement account.

“You can borrow for college, but you can’t borrow for retirement,” McClanahan said.

For those who haven’t begun saving for retirement yet, setting aside 15% to 20% of your income is considered a general rule of thumb at this age, Aaron said.

You may also have aging parents, so be sure to check on their financial planning, McClanahan said. If they aren’t prepared, it is another financial obligation that may be suddenly thrown on your lap.

Sun said she’s had many clients in their 40s start to inquire about long-term care, with Covid pushing care concerns to the forefront. Traditional long-term care insurance is expensive, but there are other policies that are a hybrid — combining life insurance and long-term care coverage.

“It is really figuring out how much you can afford, and if you can’t afford it right now, at least have the discussion so you are prepared,” Sun said. “You may have to self-insure, or look for it through work.”

Fine Tuning a Lifetime of Wealth in Your 50s

Retirement is potentially a decade away, so it’s time to get serious about how much you are truly spending, and whether you are on track to save enough to support you throughout your life, McClanahan said.

Once you hit 50, you can also set more aside into your 401(k) or IRA with so-called catch-up contributions. In 2023, the limit is $7,500 for 401(k) plans and $1,000 for IRAs.

If you don’t use a financial planner, at least get an hourly one to determine if you are on track to support your lifestyle in retirement, McClanahan recommended.

Assess your assets and make sure your portfolio is balanced to your needs. As you approach retirement age, experts typically recommend reducing risky assets, such as stocks, and increasing fixed income, such as bonds.

However, it’s important to maintain stock exposure since it gives you a greater return, Aaron said.

Living in Abundance in your 60s and Retirement

At this point, you need to have a retirement distribution strategy. That means understanding the different income streams you’ll have coming in.

“We need to build an investment strategy based on a proper asset allocation, taking on only as much risk that is needed for the income you require and your legacy goals,” Aaron said.

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Lawrence Gonzalez

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