Managing money is a skill that takes practice. When a person is in his or her 20’s, careers are just getting off the ground. Spending that hard-earned cash seems to be their new goal. Although a few indulgences are understandable, consider a few objectives that should be part of those long-term plans. Explore these top 5 money milestones to hit before age 30. They are significant for any individual who wants a stable financial future.
1. Start A Retirement Account –
Thinking about retirement savings at this age is an abstract concept; it’s literally decades away. However, it’s much easier to save up for retirement when a person starts early. Consider an employer’s benefits. They often have 401(k) plans built into their benefits package. Contribute a percentage of each paycheck to that account. If an employer matches at a specific level, such as five or six percent, be sure to allocate that amount to the account.
Saving money before age 30 allows it to grow and compound. It can also withstand the ups and downs of the stock market. Think about contributing to an IRA or individual retirement account too. A comfortable retirement is possible with diligent saving that starts early on.
2. Building Up Savings –
Unexpected expenses will arise, and finding the funds to cover them can be challenging. Before age 30, build an emergency fund. This account can be a basic savings that’s touched only if absolutely necessary. Allocate a certain amount of money to this account each month.
Ideally, an emergency fund should have around six to 12 months of monthly income available. When a person needs these funds, he or she can stay on track with those financial goals. Borrowing money in the form of credit or loans will only sink young adults into a great deal of debt.
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3. Use Credit Responsibly –
It’s important to build credit by the time a person is age 30. Try to apply for around two or three cards at various times before age 30. Use them sparingly, and pay off the balances each month. Lenders and credit histories look kindly on people who have a lot of credit but who don’t carry large balances. Look for cards with rewards or cashback so that an individual can gain more from the credit than just a credit score bump. These rewards work well for those who use credit responsibly.
4. Paying Down Your Debt –
Before age 30, try to have as little “bad” debt as possible. The amount is usually defined as unsecured debt, such as credit cards. Good debt would include student loans and mortgages because both types are investments. Credit cards simply drain money away from a person in the form of interest charges, penalties, and fees.
If a person has several credit card balances, try to pay down the one card with the highest interest first. Continue paying off the other cards in descending order. Saving money will be the ultimate achievement when they are all paid off.
5. Sticking To A Budget –
Being independent with personal income is a freeing sensation. Hardworking individuals can buy whatever they may desire. However, spending money without a budget will lead to trouble.
Create a budget that’s personalized to the individual’s income. Allocate monthly amounts to the emergency fund, retirement savings, and regular bills. Allow for a few indulgences each month, such as a night out at a restaurant, but keep track of the spending. The goal is to always make more than what’s spent. By the time a person reaches age 30, this budget should be a habit that doesn’t take much effort. With each career promotion, allocate more to savings and a bit more to daily expenditures. Life can be full of fun purchases with a close eye on spending habits.
There will always be setbacks in life. 2020 was the year that proved that to many people. Dip into your emergency savings, if necessary, but use those good times to save back up afterward. In time, a person can have a solid financial future with just a bit of discipline and strategy.