“Life begins at 30” – This statement does not apply when it comes to financial planning. If you are at the age of 30, you should have achieved some financial milestones by now. Otherwise, you may not be able to live a good financial life.
If you have not yet started to plan your personal finances, you should better start over now.
You may regret at the older age about not saving enough money earlier.
So, you are now charged enough after reading the introduction of this article and want to know which financial milestones to aim at the age of 30.
Here you go:
1. A proper financial goal
Well, to achieve something, you should make the plan mindfully. If you work hard without knowing what to achieve, then your effort can go into the vain. Thus, while managing money, it is important to set goals. This helps in achieving a financial milestone easily.
2. A well-planned frugal budget
One of the most important things which are to be included in your financial planning is frugal budgeting. This helps you to save more than what you usually do and it helps you to stay within your limits. Setting a personal budget is the first step to achieve important financial milestones. So, you should formulate a budget. If you don’t have time to formulate budget on your own, you can use any of the online budgeting tools.
3. Done with unnecessary expenditures
As you budget, you are required to list all of your expenditures – fixed and variable. So, you may be able to find out if there are any unnecessary expenditures. If there is any such expenditure or any other ones that you think you can do without, better cut down on those. In addition, try to lower the usage of credit cards as this helps a lot in lowering your expenditures. Remember, to achieve something, you need to sacrifice something. Hitting financial milestones is not easy. You have to practice to save money so that you can achieve financial milestones easily.
4. Have savings in a high yield savings account
It is important to start a savings account where you can put money. Try to put money into the account each month and avoid drawing the saved money. You should follow a formula of 30:50:20 (30% of income for saving, 50% of income for necessary expenses, and 20% of income for entertainment) while saving money in a savings account.
5. Established a loaded emergency fund
Only saving money into a savings account is not enough. By the age of 30, you should have a loaded emergency fund to manage emergency expenses like job loss, accident, natural calamities, and prolong illness. If you don’t save for rainy days, you may have to take out money from your other savings including retirement fund, which can be fatal for your post-retirement financial days. So, to safeguard all your savings, you should save enough money in an emergency fund. Try to save at least 6-9 months of savings in an emergency fund: if possible, save more than that.
6. You are debt free
You should try to get out of your current debts as soon as possible. If you are in huge credit card debts, then try to get out of them. You can repay your debts on your own by following the debt avalanche or debt snowball method. You can also consolidate your debt. Remember, having a huge debt can hurt your credit score, which can bar you from taking out loans at good rates and terms. Thus, you should repay your debts to maintain your credit health. Also, once you are debt- free, you can concentrate on achieving other important financial milestones before reaching 30.
7. Have one -year’s worth of salary in retirement fund
I am not telling you to build a fully loaded retirement account when you hit the age of 30. But, you should have at least one year’s worth of salary into a retirement fund so that you can manage post-retirement costs well. Remember, when it comes to building a nest egg, the sooner you start, the better. So, if your employment has the facility of 401(k) account, then start contributing money into it. You can also save 15%-20% of your income into any retirement account.
8. Done with some wise investments
Don’t start investing unless you have ample money for them. However, if you are earning well, then you can think about the investment even before reaching the age of 30. Just check out which investment options are more lucrative and easier to understand. Ask your peer group or have a chat with an expert regarding this matter. You can also start an investment portfolio when you become an expert in it. You can invest in stocks, shares that’ll help you get income and bonds which act as a hedge against inflation and that applies for gold too. You can also go for real estate investment when you become a seasoned investor.
9. Have a good credit score
You should try to build a good credit score at the age of 30. A good credit score plays a vital role in your financial life. As I have mentioned earlier that good credit score helps to get loans at favorable terms and rates. You can also prove yourself as a responsible person towards financial matters.
10. Have a mindset to build wealth
If you have your own property, you can take out a refinance mortgage so that you can easily pay back the loan and also build the equity on your home. You can use the money to make positive improvements on your home so that you get better resale value on selling off your property after 10 or 15 years. Later you can also go for equity withdrawal, which means you can withdraw from the equity of your house that has been built. But don’t try to do it and keep your house as it is for you need to sell the house at a better price in the future.
Well, there are many other financial milestones that you can achieve by the age of 30. It depends on how much money you earn and how you prioritize your goals. However, the key is to be a financially responsible person at the very beginning of your career to achieve these important financial milestones when you hit the age of 30. Otherwise, you will not be able to establish a secured financial life for yourself.