In your 30s and 40s, making smart money decisions requires deft juggling skills. These are typically years when your income is growing as you enter your career sweet spot. At the same time, you may be settling into family life with a partner and kids, developments that can pull you in a gazillion expensive directions.

How you deploy your growing income over the next few decades is going to play an outsize role in your security in retirement. This is the period in which a few bad money habits can make a mess of things down the line.

Avoiding that fate is not super complicated. Committing to just three core strategies in your 30s and 40s will set you up for long-term success.

Create a defense against lifestyle creep. Making more money as your career progresses is wonderful — and hard earned! — but can become a trap if you spend a lot more, too. You buy the nicer car, because you can. You take more vacations, or more expensive ones, because you can. You expand the dining-out budget because you can, and upgrade your wine and spirits of choice.

You’re not really giving much thought to the consequence of spending more: saving less. Which in the moment won’t feel like an issue, but just wait until you cross the Rubicon of 50 and start wondering how you’ll pay for the kids’ (who you’ve maybe even yet to have) college. Or your retirement.

To avoid lifestyle creep, make sure that a big chunk of your rising income is earmarked for long-term goals. Every raise or bonus, save a set percentage. Maybe it’s 50%, maybe it’s 80%. Then knock yourself out with what’s left.


Let’s say you get a $10,000 raise. With an 80/20 division, $8,000 goes to long-term goals. Retirement, paying down your student loans, or adding to the home-down-payment savings account you’ve been adding to. The remaining $2,000 is yours to spend. On whatever.

Choose the right house for your financial goals. How much you spend on a house will play an outsize role in your financial life for decades. Before you follow the crowd and take out a 30-year fixed-rate mortgage, consider how a 15-year mortgage might fit. If you have toddlers, you could be mortgage-free before they head to college, which gives you a big chunk of monthly cash flow you could use to help pay for college. You emerge in your 50s with a house paid off and neither you nor your kids are saddled with high college loan debt. (Or take the 30-year mortgage and then use a portion of every pay bump to pay it down faster.)

Size also matters. Opting for a three-bedroom rather than a four-bedroom can end up being more than $500,000 in extra retirement savings if you invest the savings from a smaller mortgage.

And if you expect to work remotely, it’s worth exploring markets that are most affordable for first-time buyers.

Be kid smart. Of course you want to provide everything for your kids. But that thought tends to blind parents. Shortchanging your own future can end up ricocheting back on the kids. If you over-prioritize spending on kids, you increase the risk you won’t be able to retire with security. And down the line, your adult kids may need to step in with financial support. How’s that giving them everything?


Think you’ll make it all work out by turbocharging your retirement savings in your late 50s when they’re out of the house? Or that you’ll keep working into your 70s? Look, those may be options, but research has found that workers in their 50s are prone to layoffs and rarely ever find another job that pays as well. If your plan requires a series of dominoes to fall exactly as you want, that’s risky.

So, calibrate your budget so you can continue to save for retirement while raising a family. And take a clear-eyed look at actual spending on kids. A survey found that one in five households is shelling out $500 a month (per kid) on afterschool sports. More than half of families surveyed spend between $100 and $500 a month.

Once college discussions begin, know there are plenty of great educations to be had at schools where the net price for a family does not require gobs of debt. Details for a financially smart college strategy:

The child-raising expense you should never scrimp on is term life insurance. To not have term life insurance is, well, dangerous parenting. Good news: it can be cheap.

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