10 Financial Milestones to Reach by 30
Your 20s and 30s are a thrilling time in life, full of new adventures.Finishing school, landing a career, and traveling to new places are all exhilarating experiences young adults commonly pursue. However, it can be easy to get wrapped up in the excitement of it all and forget about one big thing: keeping your finances on the path to success. After all, this is the time to lay a stable foundation for a prosperous future.
Here are 10 financial milestones you should aim to achieve by the time you turn 30.
choosing a credit card best fit for your financial situation. When used responsibly, credit cards can help improve your credit score and usually offer rewards for using them in the form of travel miles, rewards points or cash back. To take full advantage of the rewards offered by a credit card provider, you may choose to use your card for everyday spending. If you choose to do this, it is important to pay them off in full at the end of each month. Doing this will allow you to reap the perks and rewards of the card, and avoid interest charges and debt accumulation. Just be careful not to overspend and remember to live within your means.
Establish good creditWith so much of American financial culture revolving around your credit score, this should be at the top of your priority list. A credit score measures your financial stability and allows you to get a loan for things you may not have the cash for, like a home or car. Building up a strong credit score takes time, so starting early is desirable. Although your credit score is made up of several factors, paying all your bills on time and using less than 30% of your available limit (on each credit line) are essential to building and maintaining good credit.
Create an emergency fundUnexpected expenses could be a disaster for your finances if you haven’t planned accordingly. According to a survey conducted by GoBankingRates, 62% of Americans have less than $1,000 in savings. As a rule of thumb, you should aim to have an emergency fund that covers at least three – but ideally six – months of household expenses. You can start out with a small savings goal each paycheck and aim to increase it as you become more comfortable.
Create (and stick to) a monthly budgetIf you aren’t doing this already, now is the time to be mindful of impulse spending. Organizing your finances monthly can help you establish a more disciplined financial routine. If you’re looking for ways to trim your spending, try packing your lunch, making coffee at home, and cancelling unnecessary subscriptions. At this stage in your life, focusing on savings goals is necessary to help achieve long-term financial stability.
Contribute to a retirement savings accountThe amount you need to save for retirement depends on lifestyle and other factors, and is probably quite a bit more than you think. According to the National Institute of Retirement Security, 66% of millennials have saved nothing for retirement. Time is on your side when you start saving for retirement in your 20s. Consider opening a 401(k) plan, or if offered by your employer striving to make at least the minimum contribution to receive any matching contributions from the employer – it’s “free” money. When you contribute to your 401(k) through your employer, your contributions are likely automatically withdrawn from your paycheck, so you never even know it’s gone.
Pay bills (on time)Ah yes, bills – one of the joys of adulthood. Not only does paying creditors on time help improve and maintain your credit score, but you also avoid unnecessary late fees putting you further behind.
Save money for a homeHaving your own place to call ‘home sweet home’ will more than likely be something you want in your 30s, particularly if you want to get married and start a family. To secure a home loan, you will likely need a down payment. Traditionally, 20% of the purchase price was the magic number but today’s homeowners are typically putting down between 5 and 10 percent.
Setting a goal for how much you would like to save for a down payment is a good idea. You can use this calculator to see how many months of consistent saving it would take to meet your goal.
Pay off student loansIf you have already paid off any credit card or personal loan debt, it might be wise to turn your focus to any student loan debt you may have incurred. By paying off your student loan debt, you can improve your debt-to-income ratio, a key factor in obtaining future credit. However, make sure you have enough money to pay for everyday expenses and cover an emergency to avoid stretching your budget too thin.
Have a “treat yourself” accountDon’t get so caught up in saving for retirement you neglect your own personal milestones along the way. Open a savings account strictly for the “treat yourself” moments. Save for a trip you’ve always wanted to take, a new car, or furthering your education. You work hard, and you deserve to reap the rewards of your work in the present, too.
Set long-term financial goalsLong-term planning is a critical component to financial success. Now is the time to decide what you want your wealth goals to be. What age do you want to retire? Do you want to start a business, become a millionaire, or own a vacation home? Setting goals and creating a savings strategy now will keep you on the path to achieving the lifestyle you want in the future.
Adulthood is full of adventure. Understanding the financial milestones to hit by the time you turn 30 will only help prepare you for what lies ahead. Contact a local SouthState banker to start planning for the future, today.
About the Author: Greg Dunaway has 20 years of overall banking experience, working predominately in the Consumer Banking/Small Business space. He has also held various Relationship Management positions in Commercial Banking, with additional formal credit training in the Commercial Real Estate arena. He is a graduate of Auburn University in Business Administration, and currently member of the 2022 class Leadership Vestavia Hills, and 2022 class of Alabama Banking School. He credits volunteering with Junior Achievement, conducting live financial literacy segments on Birmingham’s ABC 33/40, and opening de novo offices in underserved or growing markets, as his most rewarding experiences throughout his career.