The financial responsibilities of being an adult start to get real by the time you age 30. With that being said, you must be sure of your financial standing or life could get really tricky. Here are five money milestones we recommend you should reach by age 30.
1. Establish an Emergency Fund
Everybody loves surprises, but it’s the unpleasant surprises that you should be worried about. You don’t know when your automobile breaks down or when a medical emergency may happen. You may even encounter the worst - getting laid off at work. These unforeseen circumstances are the main reason why having a fully loaded emergency fund is crucial.
Make sure you have enough emergency fund safely kept to cover six to 12 months of your monthly expenses. It’s okay if you struggle to put away some money at the early stage of your journey, you’ll, later on, adapt to the habit and by the time you turn 30, you’d surely find your account nice and robust.
An emergency fund will be useful to cover up monthly expenses and debt repayments if an unexpected problem arises. It’s unfortunate that nearly a quarter of Americans do not have emergency savings, thus putting their long-term financial status at risk. A person without an emergency fund will typically end up paying unplanned bills, charging them on a credit card, and losing control of interest accrued.
2. Start Saving For Your Retirement
It’s best to start building your nest at age 25. Your savings must be one-third of your salary every month if you want to save enough for your retirement. But not everyone can follow this ideal financial strategy, so if you find yourself without a retirement plan at 30, don’t be hesitate to start now. First, calculate how much you need to retire comfortably while taking inflation into account. If you want to live the same lifestyle that you have while you're still employed, make sure you save two-thirds of your last draw income every month after retirement. You can start saving now and level up your contributions when you get a salary increase or when you achieved short-term financial goals.
3. Free Yourself From Credit Card Debt
There are some types of debt like your mortgage debt which are likely to stay around for quite a while. But by the time you reach 30, you should aim to free yourself from credit card debt. When you have too much credit card debt, your credit score won’t look good which means borrowing in the future can be more expensive for you. Try not carry a balance to your credit card to avoid accrued interest making it easier for you to pay off.
4. Become an Investor
Having a basic savings account is great, but your idea of saving and investing shouldn't just end from there. If you think you can’t make big investments and accumulate wealth through it, then try investing in a unit trust or buy stocks for only a couple thousand dollars. Keep in mind that time and circumstances change every now and then so make sure you are able to meet the changes in your financial needs as well. Always check and adjust your investments if and when necessary to avoid facing financial problems and investments risks in the future.
5. Own a Property
Don’t worry if you still haven’t done this, as long as you’re aware of the process and what you need to do in order to successfully buy your own property, you’ll surely achieve this milestone before you reach 30. You have to consider several factors when buying your first property. Aside from the price, make sure it’s going to benefit you financial wise in the future. You may even take it a step farther by getting into the real estate business. You can save up and purchase multiple properties in the future to sell higher than the original price or you can have them open for rent for an additional source of income.
When you have patience, determination, and commitment, it’s not impossible to achieve these five milestones before you turn 30. Lastly, remember these five tips: start early, keep your costs of living low, max out your retirement accounts and make them your top priority, invest in stocks for the long haul, and prepare for things to go wrong so that when it does, you’ll know exactly what to do.
