Youth is a wonderful thing. It’s a time of fun, exploration, and wonder. At the same time, it’s when you can lay the foundations for an amazing future. It can be easy to get caught up in the fun and ignore your responsibilities, but your future self will thank you for having some forethought. Without further ado, let’s dive into 10 financial milestones you should reach before you’re 30, which can set you up for the rest of your life!
1. Creating A Budget And Spending Less Than You Earn
I’ve talked about budgeting before, especially for beginners. I’ve also written a complete guide that can help you from start to finish. I understand that it can seem like a daunting task at first, but budgeting isn’t that hard – especially if you keep it simple. The main thing you need to focus on is spending less than you make. Once you have that down, everything else will become much easier! So, if you don’t already have a budget, get to it.
Naturally, the point of the budget is to stick to it. So make a budget that helps you reach your financial goals, but one that is also realistic for you to stick to. A budget is pointless if there is no way for you to adhere to it! As long as you spend less than you make, you can start on the path towards financial success.
2. Create An Emergency Fund
Emergency funds are a must. They protect you from disaster and can help you avoid taking on more unnecessary debt. Your best bet is to build up a strong emergency fund, probably using a savings account with a high interest rate like the one Axos offers.
If you don’t know where to start with an emergency fund, begin by saving the equivalent of one month worth of expenses. Once you do that, you can build more or move on to the next milestone. Based on your specific case, you may want to save up 6 months worth of expenses or more, but that is a good starting point for most people. If you can’t even save one month of expenses, you need to go back and redraft your budget.
3. Establishing Good Credit
Good credit scores can help you get bigger loans with lower interest rates. It is nothing but a boon for your finances, and it isn’t particularly hard to maintain a good credit score. As long as you practice normal, healthy financial habits, then you should be set. If you want more information on how to start building credit, or just need a breakdown of how it’s calculated, check out my guide on credit scores.
4. $100,000 Invested
There are many financial goals you’ll reach throughout your life, but few are as significant as reaching $100,000. It sounds like a lot – and it really is. Once you reach $100,000, you’ll find that are finances will ramp up and accelerate faster than ever. It’s not the metric by which you can measure financial freedom, but it’s one of the biggest milestones along the way.
For those of you who have passed it, you can attest to it. Those of you who haven’t reach it yet, don’t view it as insurmountable. With hard work, dedication, and diligence with your finances, you’ll eventually get there too. It’s definitely possible to get this much invested before you’re 30!
5. Buying A Home
Most of us will buy a home at some point in our lives, or at least try to. Unfortunately, purchasing your first home can be a long and confusing process. Fortunately I decided to make a complete guide to buying your first home – with all the ins and outs I had to learn firsthand! Check it out here.
6. Investing In Yourself
If you’re over eighteen, I’m sure you weighed the pros and cons of college. While it’s not for everyone, it certainly has its uses. STEM majors still offer excellent salaries after graduation, so they can be a great way to level up your income. Now, I’m not saying degrees are everything, or even necessary to make good money.
In fact, there are tons of jobs with great pay that don’t require a degree. The main point is this – a degree has the potential to help you make a lot more money. If the return on your investment makes sense (given how much money you can make, and obviously enjoying the profession you do every day), then I’m all for degrees.
However, if you have other opportunities, like the ability to start a business, then those may be fine too. Of course, there are other ways to invest in yourself and your education besides college. No matter how you look at it, investing in yourself is always a good move.
7. Learning To Communicate About Your Finances
By the time you’re 30, you’ll probably be in a serious relationship – even married. The important thing here is to communicate properly and honestly with your significant other about money. If you’re able to talk about it, you should be able to handle it together. The biggest problem I see is when couples stop discussing finances together, so their financial security starts to fall apart over time.
8. Debt Paid Off
Eliminating high-interest debt is one of the best uses of your money. Think of it this way, eliminating debt is a guaranteed return. As a general rule of thumb, I consider anything with an interest rate over 5% too high and an absolute emergency to take care of. Some people may disagree with that, but that’s my personal line. Avoid taking on new debt (that is part of what emergency funds are for) and tackle your existing debt with the best method that works for you.
The biggest caveat here is that you need to stay disciplined and be consistent to eliminate all of your debt. It probably will take a good deal of time, so don’t expect overnight success. Take your small victories and eagerly wait for the day when all of your major debt is gone!
9. Learning To Relax And Have Fun
Remember to enjoy the fruits of your labor and live a little! It’s nice to leave behind money for your family, but don’t get so caught up in stockpiling money that you forget to live in the moment sometimes and have some great experiences. I know in the personal finance community that it’s easy to forget that, so we push ourselves too hard sometimes, but it’s crucial to enjoy the little things and have some fun along the way.
10. Create A Will And Do Estate Planning
At the end of the day, estate planning is an absolute necessity for any household! Making an estate plan sets up your family and is a good way to get your finances in order. On top of that, it gives you a clear insight into the current state of your finances and can give you a good idea about where you need to end up. Not having one is just a bad idea, so do yourself a favor and set aside the time for it.
Conclusion
Hopefully this gave you some clarity about 10 financial milestones you should try to reach by 30. If you have any thoughts, or tips of your own, be sure to let us know in the comments.
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