Turning 30 means more responsibilities and less youthful escapades. Most people are taken by surprise. That’s because they spend the better part of their 20s doing everything else except proper money management.
In fact, 76 percent of Millennials are not financially literate. You can change your story by setting some financial goals in your 20s to achieve by 30. All of that requires you to be determined.
It might appear too early to get your finances in order while still in your 20s. At such ages, there are many things that need your attention. Learning new money concepts just isn’t one of them.
But you also don’t want to regret the poor money decisions you made while younger. And now that you’re here, there’s no need to be scared.
What Financial goals Should You Achieve by 30?
If you’re wondering about it, here are the 9 financial goals to accomplish by 30:
1. Become a smart spender.
For most people, it’s easier to spend than earn. And if you don’t want your money to go into a bunch of unnecessary stuff, you better learn to spend wisely.
The first step is to track your income and expenses with a budget. But it doesn’t end at listing down your expenses and allocating money to each of them. You have to stick to it!
Your budget guides you on which expenses to cut back on or save for special occasions. If you find out you’re overspending or need to free up some money, it’s best to change your spending habits. For instance, you can start making coffee at home and only buy it once in a while.
If it’s challenging for you to stay on a budget, set alerts that keep you from going over it. You can do that through your credit card issuer’s app. Another solution to overspending is carrying enough cash and not using credit cards.
2. Save for retirement.
Saving for retirement is a financial goal that people tend to leave for their 30s, 40s, and 50s. But it’s also no mistake to start at 20-something. If you’re looking to retire early, saving for it in your 20s is a strategy that comes in handy.
According to Fidelity, it’s best to save at least 1x your income by 30 to retire by 67. The factors you need to consider are your planned retirement age and your desired lifestyle after retiring.
A 401(k) retirement plan enables employees to put a portion of their salary toward retirement. The contribution amount has a limit that may vary from one company to another.
If your employer doesn’t have 401(k), consider opening a Roth IRA. It’s done online through your bank, a brokerage firm, or robo-advisors. There’s no age limit as long as you have earned income.
Putting your raises and any other extra income toward retirement makes your financial future even better.
3. Be debt-free.
Many people wait to get a high-paying job or have a successful business before they start paying down their debts. If you want to be debt-free sooner, you need to start working on your debts as early as possible.
Student loans make up a significant portion of debts among young adults. Paying them off in your 20s saves you from accumulating interests.
While it might be challenging at first, being debt-free by 30 is doable. People like Justine Nelson have done it. She paid off $35,000 within 2.5 years.
One effective debt payment strategy is the debt snowball method. In this case, you pay a significant amount toward your smallest debt while paying the monthly minimum on the bigger ones. After that, you move on to the next smaller debt.
This strategy gives some gratification because getting rid of a small loan is a quick win. You become motivated to take care of the next debt and feel self-satisfied again.
4. Have an emergency fund.
The economy, like many other things, can be unpredictable. You never know when you’ll experience unemployment or a rising cost in operating your business.
Having an emergency fund is a financial goal you don’t want to miss. It covers your unexpected costs and gets you through any tough times.
You can free up cash using a budget and start setting aside some money for emergencies. Other than that, generating more income is helpful for building an emergency fund.
The amount you save depends on factors such as your income level and preferences. It’s best to keep 3-6 months worth of your essential expenses in the account. This approach gives you enough time to recover when a financial crisis hits you.
Remember to use a separate account for this purpose. It’s the only way you won’t be tempted to spend the money otherwise.
5. Learn to invest.
Investing doesn’t only involve wealthy business people and millions of dollars. It’s possible to reap considerable amounts of profits by starting with a small investment and scaling up later.
Robo-advisors have made investing simple for everyone. You’re required to provide some details about your investment goals to them. With such data, they can determine your risk tolerance.
The robo-advisors then use the information to match you with an investment portfolio that suits your needs. They offer automatic rebalancing where the software ensures that your funds remain close to your desired allocation. You don’t have to interact with your account once it’s up and running.
Betterment is one robo-advisor with low fees and no minimum investment. You get an automated portfolio that works well with your allocated funds.
If you develop the habit of investing in your 20s, you’ll be way ahead in the game by 30. You only have to start!
6. Achieve a good credit score.
A good credit score gives you a better experience with lenders, government agencies, and even landlords. You get a chance to enjoy the best interest rates on a new car or home. In short, it means good financial health for you.
If you have a poor credit score, you only have to improve it to enjoy the benefits. Paying your bills on time, paying down debt, and fixing mistakes on your file are a few ways to boost your credit score.
Because it takes some time to achieve a good credit score, working on it in your 20s can put you in a better position by the time you hit 30. Aim for 670 or higher and you’ll be good to go.
7. Diversify your income streams.
It can be risky to rely on one income source. No job is 100 percent safe and the economy isn’t always in our favor.
There’s no problem with working a 9-5 grind. But it becomes one if that’s all you depend on for earning money. So, how do you go about generating extra cash?
You can diversify your income by starting a side hustle. This includes selling your skills, selling other people’s products, or selling your own products. Because some of these gigs may take time to take off, starting early means you’ll be much better by 30.
Also, investments in stocks, bonds, and real estate can go a long way. There are lots of resources online to learn about any type of investment. They range from e-courses to investment-related forums.
There’s no better way to have financial security. Having more than one stream of income is a financial goal that’s essential for being financially independent sooner.
8. Buy a house.
Buying a house is something you should start considering in your 20s. While paying the full amount can save you more, a large down payment also goes a long way.
Renting an apartment becomes tiring as you grow older. The prices keep going up, you need a pet-friendly space, and people around you are buying new homes. And all it takes to get rid of these worries is to become a homeowner too.
A larger-than-usual down payment comes with smaller monthly mortgage payments and lower interests in general. Not everyone can afford to pay a huge upfront price. But it’s possible if you start budgeting for a new home before reaching 30.
9. Indulge in fun activities while on a budget.
By the time you’re 30, having a budget that allows for some fun is a great idea. After all the time spent working a job or running your business, rewarding yourself helps a lot.
The amount of fun you can have depends on how much you’ll be earning. You can go out with friends or attend your favorite concerts and matches. If you work on increasing your income over the years, taking a trip abroad won’t even be a problem.
It’s good to set aside some money for discretionary expenses. This type of expense covers your needs. If you can keep yourself within the limits, there’ nothing to worry about!
Wrapping It up
If you’re looking to achieve any financial goals by 30, you need enough time and energy to work on them. So, it’s best to start pursuing everything necessary for financial freedom as soon as possible.
Take the tasks now and enjoy the benefits later. On top of it all, check out the 3 steps to achieve any goal in 2021.