Balancing today’s priorities with tomorrow’s goals

Brandon and Kindall Dobson recall a time when they were surviving solely on Brandon’s part-time income of $8.50 an hour. The couple was living paycheck to paycheck, adhering to a strict budget and couponing to save as much as they could.

“I look back and I don’t know how we did it,” says Kindall, 37, who recently worked as an elementary school principal in Wilmington, North Carolina. “We had a lot of family that loved us and helped us, but we had to be pretty strict at the time because we weren’t bringing in that much.”

As they started to make more money, one of the first things they did was purchase a life insurance policy. Over the past eight years, the couple—who have two children, Nora, 9 and Ian, 4—worked with Thrivent Financial Advisor Matthew Beatty to help them plan for their family’s future.

“We’re not trying to be the richest people on the block. We know that every dollar we have is a gift, and we want to be able to steward that,” says 33-year-old Brandon, who owns a fence company. “I don’t know when we’ll retire, but I don’t want 40, 50 years to go by with nothing in the bank. Plus, we still have to pay off our house and figure out college.”

Charles and Andrea Humphrey, from Los Angeles, are on the other side of that major life milestone: Their 22-year-old daughter Lauryn graduated from college this past spring, with 19-year-old daughter Sydney entering her sophomore year at a dance conservatory this fall. With smart planning, the couple—both pastors and authors—were able to pay for their kids’ education while still saving for retirement.

The Humphreys hope to retire in the next two to three years. With help from their Thrivent financial advisor, they feel prepared to retire with income from real estate and other investments, retirement accounts and pensions, and cash value from life insurance policies.

Whether it’s paying for basic needs, funding education or saving for retirement, these Thrivent clients demonstrate there always will be financial demands and priorities to juggle, no matter what stage of life you’re in. Here, Thrivent financial advisors offer their advice for balancing everyday expenses with saving for the future through your 30s, 40s, 50s and 60s.

With young kids, careers and aging parents, the Dobsons acknowledge this is the busiest season of their lives, one in which budgeting can be difficult. “I think when people are in our stage of life, they think the future is down the road, but the future starts now,” Brandon says. “You have to start putting money away if you want it to have time to build up.”

“You have to be super intentional,” adds Kindall, noting that they track expenses to know where every dollar goes and pay off their credit card each month to avoid interest charges. “You can’t be passive with your budget, or your money in general.”

Balancing finances in your 30s can be a challenge because, oftentimes, you have bigger expenses while earning the smallest income you ever will. You still may be paying off student loans, looking to purchase your first home or a bigger home, and starting a family or raising young children, which potentially comes with the expense of child care.

“In your 30s, you’re trying to build,” says Cameron Richardson, an Advice Services consultant at Thrivent. “But if you can be proactive instead of reactive and build your family and life on things that are important to you, that will set you up for success.”

Evaluate what is most important to you, and be realistic about what you can afford: Do you need the $500,000 house, or will the $300,000 house do? Do you have to drive a Tesla, or does a minivan make more sense for your family? “You may have a Cadillac dream with a Honda budget,” Beatty says.

The earlier you start, the better off you’ll be financially—thanks to compound interest, or earning interest on your interest. Beatty recommends contributing 10% of everything you earn to a retirement account, and even gradually moving up to 15% if your income allows.

If you lose your job, the furnace goes out or you experience a medical event, you want to be able to cover expenses. Don’t be overwhelmed by the rule of thumb that states you should have three to six months of expenses covered: Start with $1,000 and build from there. Eventually, you want to get to your “sleep good number,” Beatty says. When it comes to your emergency savings, “what is the number that helps you sleep at night?”

Life insurance ensures your loved ones are financially protected should something happen to you. By purchasing a policy in your 30s, when you’re the youngest and healthiest you’ll ever be, you’ll get the best rates. “Get as much insurance as you can for as much as you can afford,” Richardson says.

As you age into your 40s, you may be done with the days of diapers and day care, but new family-related expenses will make their way into the budget, such as kids’ sports and other extracurricular activities, as well as braces and car insurance for teens. Your 40s are also a time when priorities may shift in your personal and professional life.

“Around 45, when you’ve spent the last 20 years working and you’re looking at the next 20, you start thinking more about retirement and asking, ‘Have I done enough?’” Richardson says. “This is where lifestyle creep really comes in, too. You’re making more money and starting to make upgrades to your house and car, but you also have big expenses coming down the pike, like kids going to college.”

You may be exploring a different career path that allows for greater work-life balance, indulging in your favorite hobbies or wanting to travel more. “As life experiences and responsibilities evolve, the priorities you had in your 30s often change significantly by the time you reach your 40s,” says Marc Henderson, Thrivent market director in Southern California. Maybe you start asking some of the larger questions, and you’re not going to spend your time and energy doing things that don’t bring you happiness.

With more mobile kids, “the vacation bug starts going a little crazy,” Beatty says. Allocate a small percentage of every paycheck to a separate travel savings account so the money is there when you’re ready to book a trip. Still, be realistic about the type of vacation your budget allows for: If you want to take a beach vacation, consider Florida instead of Hawaii, and rent an Airbnb instead of a hotel so you have a kitchen to cook meals and curb dining costs.

Now is the time to talk to your kids about how college will be paid for. Are you going to cover 100% of the costs, or will your student be expected to take a loan for all or part of the expenses? In your planning, remember that there are no loans for retirement, so if you want to pay for college, does that mean you have to work longer? Ask yourself, “What is the sacrifice you’re making to pay for college, and are you OK with that?” Beatty says.

Your 40s are when you’re likely part of the “sandwich generation,” a group of adults who are still raising kids but also starting to care for aging parents. Though the conversation can be difficult, you should ask your parents what they have planned for their future—because what they have or haven’t prepared in terms of retirement accounts, life insurance and long-term care may impact your finances later on.

After decades of working and saving, “you’re knocking at the door of retirement” in your 50s, Beatty says. Your focus shifts away from your professional life and onto your personal one: Your kids may be graduating from college and starting families of their own, and your parents could be relying on you more as they age.

This resonates with the Humphreys, who have children attending and graduating college and Charles’s 93-year-old father living with them as Charles and Andrea prepare for retirement. “I want to spend my active, healthy days doing things other than punching a clock from 8 to 5,” says Charles, who also works as an environmental engineer. “I want to be able to do more outreach, local community stuff and do ministry.”

“We’re also major givers,” Andrea says. “We do a lot of mission work. I go to four or five countries a year, speaking and doing leadership development with various organizations or churches that invite me in.”

With more time on your hands, your 50s and 60s are a time when “you start asking questions about what’s really important to you, what you’re passionate about. Maybe you start getting more involved in your church or volunteering,” Richardson says. Also, “your mortality becomes more prevalent. So, you start thinking about your own health and longevity, and how that impacts your spouse, your kids and your financial plan.”

Review your finances to see if you have enough saved for retirement or if you need to play some catch-up in the coming decade. This will largely depend on the age you want to stop working, as well as what you want your lifestyle to look like in retirement, whether it’s traveling, purchasing season tickets for your favorite sports team or relocating to be closer to grandkids.

If leaving money to your loved ones or organizations you care about is a priority for you, a financial advisor can walk you through your options, such as trusts, donor-advised funds or life insurance policies.

Even if you’ve taken good care of yourself throughout your 30s and 40s, you may start to experience more health problems in your 50s and 60s—and there are costs related to that, whether it’s surgery, physical therapy or medication. “Health care is not something that sneaks up on you,” Beatty says. “If you’re real with yourself, you know if you’re healthy or not, so as you plan for retirement, how are you saving for health care?”

On top of your own health care needs and costs, you may have some parent responsibilities and expenses depending on how well they planned for the last stage of their life. You may need to make some tough decisions, such as deciding whether to move your mom or dad into your home or into a long-term care facility.

When you stop working and lose a source of income, it can feel like a dramatic shift. “You went to work and got a paycheck from a company where the chief financial officer had to manage where that money came from,” Beatty says. But in retirement, “now you are put in the CFO position of understanding where your money is coming from.” Here are some tips to make sure your retirement savings last:

In retirement, you may want to allocate more dollars toward leisure activities and hobbies, but you still need to create a budget to make sure you’re not overspending.

Take inventory of retirement accounts like 401(k)s and IRAs, pensions, nonqualified investments, real estate investments or Social Security.

Split your funds between monthly income for essential expenses and investments to build more income over time. “Even in retirement, establishing a short-, mid-, and long-term strategy is essential as your income needs in your 60s likely will be different in your 70s, 80s and 90s,” Henderson says.

Depending on the types of retirement accounts you have, you may need to pay taxes on the money you withdraw in retirement. Talk with a financial advisor about ways to minimize taxes in retirement, like donating to charity and delaying Social Security benefits.

Tackle debt at any age

Debt can happen at any age, and while it’s important to pay back money you owe as quickly as possible, you should strategize how to balance saving while eliminating debt. If you have low-interest debt (typically under 6%)—such as a mortgage or student loan—first work to build an emergency fund and maximize 401(k) contributions. But if you’re carrying high-interest debt (think: credit cards) that makes you anxious, aggressively pay those down while saving a small amount until they’re paid off. Two common debt payoff strategies are debt avalanche, in which you tackle the debt with the highest interest rate first, and debt snowball, where you pay off debt in order of smallest to largest dollar amount.

A Thrivent financial advisor can help you set and meet your financial goals through every stage of your life. If cash flow is getting away from you or if you need help tightening your cash flow to align with your goals, check out Thrivent’s Money Canvas™ program. It's a series of free one-on-one meetings with a financial coach to help you see where your money is going and build healthier financial habits.