How Financially Fertile Are You?

By the time you feel ready to get serious about your money, it may be too late to make up for lost ground. And there are no medical breakthroughs when it comes to retirement or building an adequate nest egg.
03/02/2012 06:10 pm ET Updated Jan 28, 2018

It's no surprise these days that many women are starting their families later, often after the magic age of 35 when female fertility begins a sharper decline. Our reasons may differ: we're waiting to marry, want more time for our careers, feel greater independence, or just aren't quite "there" yet. But thanks to advancements in reproductive technology, women have some options when they do feel ready to parent.

Unfortunately though, the same kinds of choices don't exist when it comes to your financial fertility -- the term I use with clients to describe the ability to achieve your specific financial goals before you reach middle age. Nobody likes to hear the cold, hard truth. And nobody is really being straight with you about your financial fertility.

Well here it is: By the time you feel ready to get serious about your money, it may be too late to make up for lost ground. And there are no medical breakthroughs when it comes to retirement or building an adequate nest egg.

Of course, there are many paths to financial security. But whatever kind of financial future you do choose, you need to make informed decisions at every stage of the process, so you don't turn around one day and realize a door has shut on you for good.

With that in mind, my advice for each of the most financially fertile decades of your life:

Financial Fertility in College
Dr. Karen Benjamin Guzzo, a sociologist, specializing in family and demography, and an assistant professor at Bowling Green State University, told me that many of the college students she sees are working part-time (or even full-time) to help finance their education -- and things like mortgages and childcare costs feel far off in the distance. But she encourages them to look at starting salaries in their chosen field of study and to be realistic about the kind of lifestyle they'd like after graduation.

You may not want to pick a major just to optimize your earning potential, but you do need to be an active participant in the educational choices you make and be aware that your decisions today will affect your salary (and your financial freedom) down the road.

Also, learn to live like a student while you are one. Do not wrack up debt on consumer items while you're in school, and start your 20s with one arm tied behind your back.

Financial Fertility in Your 20s
You know how you've got a fixed supply of eggs over your lifetime? Well, you also have a limited amount of years in which you can develop healthy spending habits and manage your money productively.

Manisha Thakor, personal finance expert and author of Get Financially Naked, told me the number one reason most folks in their 20s are in denial about savings: they don't realize how powerful those years are.

Her example: if you start saving $5,000 when you're 25 and do so every year until you're 65, you'll have a million dollars at age 70. Wait until 45 to do the exact same thing? You'll have $200,000.

Sure, most people in their twenties can't possibly save $5,000 annually, but it's still a huge wake up call. Every dollar you do put aside now is five times more powerful than when reach your 40s. So if you do get an unexpected gift or tax refund (no matter the size), invest it.

Financial Fertility In Your 30s
Without question, the best thing you can do for your financial fertility in your thirties is to live within your means and avoid keeping up with the Jonses at all costs.

I've seen so many families earn more money, and get an instant case of lifestyle inflation. They equate being a "real adult"or a capital-P Parent with a bigger home, better cars, more stuff. All the time, I hear about how something -- a pricey article of clothing, a new couch -- is an "investment piece." Don't fool yourself. No matter how lovely your new living room furniture looks or how great your Prada shoes make you feel, they don't appreciate and they won't pay you any financial dividends.

I know it sounds almost un-American, but live below your means today -- whatever that looks like in your particular situation.

Financial Fertility in Your 40s
Remember Manisha Thakor's math? Well, it's never too late to sock money away in your retirement fund. After all, if you put aside that $5,000 for the next 25 years, you still have a nice chunk of change by age 70.

Biggest advice when you turn 40: Make the smart trade-offs for your future. You have 10 valuable years to get in the game -- shed any remaining credit card debt, downsize your home if you need to, and get back in the workforce if you've taken time off to raise your kids.