How to Make the Right Money Decisions at Every Stage of Life (2024)

In the past, figuring out what to do with your money was fairly straightforward. But today’s young adults face huge changes in how to make money, invest it, donate it, and have enough around for a healthy retirement. Among the new hurdles: a revised tax code with both perils and opportunities, a corporate culture that rewards ownership over employment, and a dramatically shifting philanthropy environment that allows for a bigger impact but also requires a much more complex commitment. Did we mention the modern family—with ex-spouses, stepkids, you name it. All of which is to say that financial planners have their work cut out for them. We spoke to one who specializes in wealth management to help plot out a lifetime of sound financial decisions.

Post-Grad Life

THE SITUATION No more teachers, no more books? Not so fast. According to Katie Nixon, an executive vice president and chief investment officer at Northern Trust, this is exactly the period in your life when you’ll be putting what you learned in algebra class to work. 
THE PLAN “My best piece of advice at this stage would be to do a budget,” she says. “You would be shocked by how few folks in that age group actually know what they spend.”

KEY HIRE You’re not quite there yet, but your parents’ accountant will probably answer a few questions if you ask nicely.

The Earning Years

THE SITUATION By your mid-twenties you could be making serious money—even if you haven’t figured out exactly what to do with it. So before sinking it all into your roommate’s startup, try thinking about long-term strategies that will benefit from an early start: enroll in a Roth IRA, stash what you can in savings, and start using credit cards issued in your own name. If you can, buy a house. (If you can, buy your neighbor’s house, too.)
THE PLAN “If you start saving even a minimal amount when you’re in your twenties, it adds up,” Nixon says. “Unfortunately, we see a lot of folks who don’t focus on this until they’re in their forties. By retirement, wealth is dramatically higher if you’re able to start earlier.”
KEY HIRE A financial planner (not someone you went to school with, okay?) who can sketch out a long-term strategy.

Love & Marriage

THE SITUATION Great news: You’ve decided to spend your life with someone. But there are never only two people in a marriage; there are also their accountants, lawyers, and—if there’s inherited wealth involved—plenty of family members.
THE PLAN Start with that time-tested romantic gesture, the prenup. “A prenuptial agreement used to be a bit of a third rail,” Nixon says, “but now it’s becoming common­place.” A postnup is also doable, but try to get everything locked down before you procreate.
KEY HIRE An estate lawyer. Whether you’re planning to have kids or coming into an inheritance yourself, someone has to help you figure out how to manage it.

Up in the Heir

THE SITUATION After the basics, like teaching your offspring financial literacy and setting up trusts, are taken care of, it’s time to think about what kids might require in the long run.

THE PLAN Parents, pay for college up front—nobody wants to be saddled with student debt—and then decide how you’ll divide things when you’re gone. In the past fortunes could be distributed pro rata or done in a way that made clear which kid was the favorite. Today, as families take on new forms, experts recommend a “statement of intent,” which can be paired with trust or estate documents to spell out the focus of and reasoning behind your bequests.
KEY HIRE First: a good nanny. Second: a reliable executor.

The Liquidity Event

THE SITUATION You finally sold your company. Now what?
THE PLAN Whether you’re getting swallowed by a bigger fish or being bought out, hitting this kind of payday is a dream ­scenario—but it doesn’t always stay that way. “People feel really rich,” Nixon says, “but we know that bad things can happen.” It’s vital to structure a payout that works for your needs and doesn’t leave you without a source of income.
KEY HIRE A philanthropy adviser. Now that you’re loaded, it’s time to start thinking about how to give it away.

Retirement

THE SITUATION For previous generations retirement lasted a decade or two. Today, if you play your cards right, you could be retired for as long as 50 years. That’s a lot of golf.
THE PLAN Nixon says she always tells clients, “Put on your own oxygen mask first. Let’s make sure that you’re bulletproof for your whole life cycle. Then we’ll determine what excess assets you might have.” Still, it might not be the worst time to get that McLaren 600LT supercar you’ve always wanted.
KEY HIRE A small company analyst to help you pick startups in which you can be an angel investor.