Whether we like it or not, life and money are linked. Furthermore, money matters at every stage of your life. You should always be thinking about your financial goals.

Sure, some might be long term goals—like saving for retirement, which you should be doing as soon as you have an income. But then there are other goals, which are shorter term. For instance, saving money for a down payment on your car won’t take quite as long. Either way, both long- and short-term goals need to be considered when taking charge of your financial life.

Budgeting for financial planning

Some people assume that recent grads don’t have to consider their financial big picture. But nothing could be further from the truth. The earlier you look at your short term financial goals, the easier it will be to plan for your long-term plans, like retirement or saving for a home.

Here’s why budgeting matters at every stage of your life.

Learning How to Budget in Your Twenties

Creating a budget is essential if you want to know how to manage money and save for all purposes. In your 20s, life probably seems pretty crazy. It’s that precarious moment when you graduate from college and enter the job market and real adult world. Budgeting in your 20s most likely entails spending on necessities, paying off loans, spending money on social activities, and saving everything else.

Your first step in budgeting should be to set up an emergency or savings account. The job market is in flux. Having an extra cushion to rely on if you experience an emergency such as losing your job or getting into a car accident won’t be as bad if you have a financial safety net.

After that, as well as after paying bills, you should consider long-term saving. Many financial advisors recommend the 50/30/20 budget plan. You spend 50 percent of your income on necessities, 30 for entertainment, and 20 percent ends up going to your savings.

First, calculate your after-tax income. If you’re an employee with a steady paycheck, it shouldn’t be that hard to figure out exactly how much you make after taxes. Look at your paystubs, though. If healthcare, retirement contributions, and any other deductibles are taken out, add them back in.

Next, limit your needs to 50 percent of that gross income. Things like housing, groceries, utilities, and insurances, should all be paid with half of your income. If you’re spending more than half of that income on your payments, consider tracking your spending habits in other areas of life. You can always utilize strategies that will help save on necessities. This may include switching insurances, using coupons, discounts, or getting a roommate. Make sure to use the most economic but wise options.

Of course, the 50/30/20 plan might not work for you depending on how much money you are making. Consider the circumstance you’re in and how much you’re able to spend. It’s totally acceptable if you start with only saving 10 percent of your income, if that’s all you can do. It’s also a great time to start a retirement account in the form of a 401(k) and IRA. Just keep in mind that the more you save and the earlier you start, the more money you’ll have for your golden years.

Budgeting in Your Thirties

Budgeting in your thirties is a bit different. In a lot of ways, debt freedom should be considered a goal in your 30s. Typically, ideas of buying a home and starting a family can come up during this decade of your life. If this is something you’re considering, starting a saving plan for a down-payment can be incredibly useful.

Additionally, if you want to have children, consider a savings plan for them. This includes childcare, health insurance, and eve college tuition. According to Time, the cost of raising a child has jumped to $233,000. So, start planning ASAP.

Prioritizing your business budget
photo credit: slightly everything / Flickr

Budgeting in Middle Age

Budgeting in your 40s and 50s should be more focused on saving for your retirement. At this point, it’s smart to have taken care of high interest debt, and saving more each year on retirement. Compound interest solutions are incredibly valuable when saving for this important era of your life. Additionally, keeping your emergency fund topped off is a great way to make sure you’re on the right track to a solid retirement.

Budgeting Before Retirement

Saving in your 60s means you’re basically ready to retire. This is a time you shouldn’t be taking financial risks. It’s time to buckle down because you don’t have too much time to make more money for your retired life. Now is the time to budget accordingly to how you want retired life to look like. After all, being retired is roughly a third of your life time. Is it your dream to spend the next 10 years in an RV in the American southwest? Or would you prefer to downsize your home, save the profits, and leave a nest egg for your grandkids?

Just as your life will adjust and change as you grow, so will your budget. With these helpful tips in what to consider when making a budget, you’ll be well on your way to living your best life now and in the future.