The Under Forty Bucket List

I'll admit it, I'm over forty now. Often, I think about the financial choices that "under forty" clients must make and the consequences of those decisions over a lifetime. I'm a big believer in saving for the future, but I also believe you should enjoy your life along the way. You can achieve both by creating savings accounts for different short, medium and long term goals as well as following proper financial planning. Here is my advice about things you should do before you turn forty. Here is my "under forty" bucket list and how you can make it happen.

Complete Your Education and Pay Off Your Debt

The best time to finish your education is when you are young. Taking endless graduate programs and professional programs may be intellectually satisfying and fun, but it can put you in serious debt. Student debts are bigger than ever. Your goal should be to finish the education you need to begin your career and pay off your student debts as soon as possible. That should be a primary goal; otherwise these loan obligations will hurt your current cash flow and keep you from living the life you want. Being free from student debts will give you the extra money to invest and have fun.

Buy the Car You Want

We spend much of our lives in our cars. They are a reflection of our personalities. Within reason, I believe you should drive the car you want. Negotiating a good lease or loan can save you a considerable amount of money. It is usually better to have a car under warranty because unexpected auto expenses can ruin your month. Another suggestion is to buy a certified used car. This is a really nice benefit which can give you a much nicer car at half the price of a new one. The bottom line is, if you look hard and get good financing, you can get a very cool car for a reasonable payment.

Buy a House or Condo

It takes a decent amount of money to buy a home and then more money to furnish and maintain it. But buying a home has many advantages, both financially and emotionally. Buying a home requires a down payment, usually 20% of the home price, as well as good credit. It is so important to maintain your credit score and pay your bills on time. The banks track everything and getting credit is key to getting many of the things you want. You must start a savings plan for your home down payment. By saving extra money now while you are renting, when you actually buy your house, you will be used to the increased monthly costs. Owning a home will not be cheaper than renting. Buying a house at a younger age allows you to build equity over time. Not only is it fun to have your own place (except when things break) but you are building your wealth for the long term.

Open and Fund Your IRA

Save for your retirement when you are young. It is never too soon to start planning for your retirement. Many people think that because they are young and make less money, they cannot afford to fund their IRA. This is far from the truth. As you get older and earn more, your bills go up as well. Once you start a family, it becomes harder than ever to pay all your bills. Saving for retirement when you are young not only helps you get ahead for the future, but it gives you confidence as you see your assets and financial security grow. You can only put $5,500 per year into an IRA, so the sooner you start, the more money you will have later. I recommend setting aside whatever you can and deposit it into your IRA every month.

Travel the World

Everyone needs a travel savings plan. Travelling the world when you're young is not only fun, but it is intellectually rewarding and can be professionally important to your understanding of the global economy. Travel can be one of the most important and enjoyable things you do when you are young and unencumbered by children. Once you have a family, travel is a different kind of experience - also enjoyable, but different. Travel can be very expensive. But it is worth the money. Go see the world, but save for it, don't do it on credit cards!

Invest in UL Life Insurance and Build Cash Value

Buy life insurance when you're young and healthy. Many young people don't see the value in Life Insurance because they don't have a family to protect. Eventually most people marry and have kids, you will be happy that you had the foresight to buy life insurance when you were young and healthy. Building cash value within an insurance policy can really only happen in earnest if you invest in a policy in your twenties or early thirties. Building cash value in an insurance policy builds an asset for you that you can use in the future. Also, it is more likely that your health will be better when you are young and if you have any health issues, life insurance becomes very expensive, assuming you can be insured. It is smart to buy life insurance when you are young and health when it is cheapest.

Take Your Friends Out to Celebrate Your Birthday

People love birthdays! Now thanks to facebook, you can get tons of messages from your facebook friends. That's nice, but it is really fun to take your friends out for a real party. It's expensive to take 15 friends to dinner, but you can have a birthday party fund and save $100 and $200 a month so you can celebrate your special day with your special friends. If you don't do it every year you can do it at 25 and 30 and 35 and especially at FORTY. Plan a fun party and treat your best friends.

Build your financial security when you're young. Save money every month and over time you will get ahead and lay the foundation for financial security as well as live the good life. Let's face it, money equals freedom and fun, preparing for your future should be balanced with enjoying your life today. With a good financial plan, some discipline and good habits you can build substantial wealth over your lifetime and amass amazing life memories along the way.

Ross Gerber
Gerber Kawasaki Wealth Management
2716 Ocean Park Blvd #2020
Santa Monica, CA 90405


Investment advisory services and fixed insurance offered through Gerber Kawasaki, Inc., a registered investment advisor.

This material contains forward looking statements and projections. There are no guarantees that these results will be achieved. Investing involves risk including potential loss of principal.