For many young adults, your 20s are a time of tremendous change. Between new career paths, moving to new cities, starting new relationships, learning more about yourself, and figuring out what you want out of life, it’s safe to say that 20-somethings have a lot on their plate.
We’re going to let you in on a little secret: That never stops. Sure, by the time you turn 30, you will likely feel more secure in your job, you may own property, and hopefully you’ll be at least somewhat financially stable, but the slew of responsibilities do not halt with age, they simply evolve — think babies, mortgages, retirement, and aging parents, to name a handful.
Despite your 20s being a potentially hectic decade, it happens to be the best time to work toward solidifying a sturdy financial foundation. To get you started, we’ve rounded up ten of the top milestones we believe are worth aiming for by your 30th birthday.
- Be financially independent of your parents
For some, financial independence began the minute they turned eighteen, but for many of us, some degree of financial dependence on our parents lingers on even after we’ve left home. It could be your cellphone bill or perhaps they still pay for you to fly out for family vacations. Whatever it is, aim to be completely financially independent by age 30.
- Establish good credit
As your credit score dictates your eligibility for anything from buying a new home to taking out a business loan, it’s incredibly important to build up good credit. A couple tips for keeping your credit score up are to always be sure to pay your credit card bill on time and to keep your outstanding balance below 30 percent of your credit limit. For additional tips on establishing good credit, check out our previous blog.
- Have a year’s salary saved for retirement
Yes, you read that right. If Gen Z and Millennials can learn anything from previous generations, it’s to over-prepare when it comes to retirement planning. If your employer doesn’t offer retirement benefits, it’s your responsibility to open up an IRA or a 401k, both of which allow you to invest money for retirement.
- Maximize employer benefits
Piggybacking off of milestone #3, if your employer does offer benefits — employer retirement plans, 401k matching, etc. — be sure to take advantage of them.
- Establish a rainy day fund
If an emergency happened, would you be prepared? Nobody can predict if and when an emergency will occur, but you can ensure that you’re prepared in case of the worst. Whether your car breaks down or a global pandemic breaks out, having a rainy day fund ensures that you’re not caught completely off-guard.
- Start an investment portfolio
Like we mentioned in this previous blog, your 20s are a great time to get into the stock market, as investing early gives your money lots of time to grow.
- Be consumer debt free
We understand that some debt might follow you into your 30s, from student loans to personal business loans, but consumer debt should be a worry of your past. By the time you reach 30, you should be capable of budgeting and living within your means. If you can’t afford a fancy car, you shouldn’t be buying a fancy car. If you need to open up a new credit card to afford that trip to Cabo, you can’t afford that trip to Cabo.
- Regularly contribute to charity
As we frequently stress, giving is a fundamental component of personal finance. Whether you make a year-end donation to an organization that is near and dear to your heart or you simply donate five bucks a month to your favorite radio program, supporting a cause you believe in is a great opportunity to give back to your community.
- Appreciate that money is a tool
Nobody is going to argue with you about the importance of money — we need it to eat, pay rent, fill our gas tanks, travel — but at the end of the day, it is just a tool. It’s critical to understand the value of money, to be smart with your finances, and to think about the future as much as you think about the present, but try not to let money control your life.
- Consult a financial advisor
Just like financial advisors aren’t just for the ultra-wealthy, they’re also not just for older generations. The sooner you consult a financial advisor, the longer you have to partner with them and come up with a strategy that aligns with your big-picture financial goals.
Ready to take the leap? Reach out to The Humphreys Group to schedule your introductory meeting.