What to do with your money in your 20s, 30s and 40s, according to a financial adviser.

As a financial adviser, I’m often the bearer of bad news when people ask me for advice to get rich quick. The truth is, when it comes to building wealth, what works is having good money habits, being consistent and spending less than you earn. 

I have three kids and when they’re old enough, I intend to teach them that it's never too early or late to start building wealth. No matter how old you are, there are always opportunities to make your money work harder for you.

Here are some money strategies and ideas you can look to implement in your 20s, 30s and 40s to build wealth and set yourself up for financial success. 

But first, watch: Four money hacks that don't cut out your daily cup of coffee. Post continues below.

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In your 20s: Build your financial foundation.

It may be tempting to spend your wages going out with friends but your 20s is a time to set up your financial foundation. You’ll most likely spend this decade of your life finishing your education, starting your career, travelling around the globe and finding your way in the "adult world". 

From a wealth creation perspective, the number one thing you need to nail in this decade is learning how to manage your money on a month-to-month basis. This means is that you need to know your numbers - what comes, what goes out and what is left over each pay cycle (your surplus). 


You then need to make a plan for what to do with this surplus each month and have a structure in place where this amount is automatically moved out of your spending account each pay cycle. 

This money might be put into a separate savings account, holiday account or investment account. The reason you want to take it from your spending account automatically each month is because if you don’t see it, you won’t spend it. 

We have a savings target benchmark with our clients where we aim for them to save between 20 and 40 per cent of their take home pay each pay cycle. With this money going into savings account, extra mortgage repayments, investments accounts or put towards their goals which could include travel, starting a family or paying for their child’s education. 

The other important financial strategy in your 20s is to avoid credit card debt. This is a bad financial habit that you can get into when you are young and carefree. Bad credit can take years and many thousands of dollars of interest to get out of. Stick to spending your own money and use a debit card for your expenses.

In your 30s: The prime time to build wealth.

Time is your friend when it comes to building wealth and so the sooner you start saving, investing, and building financial assets the better off financially you will be. Everyone I have ever spoken with about their finances wishes they started doing something with their money 10 years earlier. 

With a strong foundation set (no credit card or short-term debt and some savings in place), a good income and having gotten some travel and life experiences out of the way in your 20s. You are now ready to really focus on building your financial asset base in your 30s. 


Using the same automated savings structure, you put in place in your 20s but with a bigger surplus amount available each month. I now want you to focus on the following areas: 

Your property plan.

This will involve putting away money each month for a property deposit. Your target should be to save at least 15 per cent of the purchase price of the property you are trying to buy. 

To cover a 10 per cent deposit whilst allowing 5 per cent for the expected costs of the purchase e.g. stamp duty, legal fees and bank fees. 

When developing your property plan you will need to determine whether you are going to purchase a home or an investment property as your first property purchase. 

Your share strategy plan.

The benefit of having a share strategy in place is that it does not require large amounts of money to get started. It is very flexible and usually does not involve you having to borrow any money from a bank and make interest repayments.

This strategy can be started with as little as $500-$1,000 and can be matched with regular monthly contributions (from your surplus) that can help build a small starting balance into a very big balance over time. 

Shares allow you to diversify your investments, so not all your money is in property (which is quite common in Australia). They’ll also give you the opportunity to invest your money into companies, industries and ide’s that are important or of interest to you e.g. climate change, crypto, AI and robotics. 


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Your income plan.

This may not be a common strategy for an adviser to talk about with their clients. But the number one driver of your financial options now and into the future will be your income. 

So having a plan and investing some of your money trying to increase your income is a smart financial strategy. This may involve saving for and starting your own business, completing further study that will help with your career progression and future income earning ability or professional and personal development courses that'll teach you new skills and make you more confident and productive.

In your 40s: Build on the momentum.

Your 40s and your 50s should really be your peak earning years and is the time where you should start to see some real traction with your wealth creation strategy. 

Financial strategy priorities:

1. Paying down the mortgage on your home.

This strategy will help with both your short term and long-term financial goals. It will increase the equity in your property (the amount you own of the property), help reduce the amount of interest you need to repay to the bank and may help set you up for an early retirement.

2. Building your asset base for retirement or financial freedom.

If you want to retire or achieve financial freedom you are going to need an investment portfolio that can pay you an income that covers your annual living expenses each year. 

This investment portfolio for most Australians, will usually be made up of shares, property and superannuation investments. 


The income amount you need to cover your living expenses each year will determine the size of the investment portfolio you need to achieve this goal e.g. the higher the income amount the bigger the investment portfolio you will need. 

3. Setting the kids up financially.

This might involve putting in place an investment strategy that will help fund their schooling/university expenses. You might also consider thinking about helping them enter the property market in the future and putting in place an investment strategy that will help with this .

Building wealth and personal finance is a bit like the health and fitness industry. There are so many different strategies, fads and tactics that different people will sell you on to get results. 

But what you need to do to achieve success is actually quite simple - have good habits, be consistent and focus on progress. It’s just that these things are not very sexy. 

Often people will start them and then stop them because results don’t come fast enough. They jump onto a new strategy to try and achieve the results they wanted. If they had just kept doing the right things long enough, they would have experienced the results they were after. 

Winning with your finances is exactly the same! 

Ryan Porter is a Wealth Coach at Catalyst Wealth Group. Find more from him here.

Feature Image: Getty/Mamamia.