30 may seem far away, right around the corner, or far in the past to you.
We’re currently (at the time of updating this article) 25, so we’re right at that halfway mark between 20 and 30. 30 is looming closer and closer, but we still have far enough to go that I think we’ll be ready when 30 does hit.
Ready for what, we’ll never know.
Below I’ve listed the 9 most important financial milestones that everyone should at least TRY to achieve before 30.
Why 30?
Because today, the 20’s a more a time of singlehood, travel, starting your career, and discovering who you are. Then, when you get into your 30s, most people get married, start having children, buy a house etc.
Not that there’s anything wrong with doing all of those things in your 20’s.
Take a look at this list and see which of these milestones you’ve already achieved + get some ideas for some new personal finance goals!
Set Up An Emergency Fund
Yes, you have heard this before, but it is very important. Not only does a solid Emergency Fund give you great peace of mind, it cushions you against many unexpected expenses, it keeps you from incurring credit card debt that you can’t repay.
How Much Should Your Emergency Fund Be?
Experts recommend anywhere from 3-12 months of living expenses, while Dave Ramsey recommends $1,000 while you are still paying off debt.
Here is what I say:
Start with $1,000, or 2x what the deductibles for your insurance are. For example, if you have a $2,000 deductible for your auto insurance (a great way to save money on your rates) you should have $4,000 in your emergency fund. If your highest deductible is only $500, then start with $1,000 in your emergency fund. From there, start paying off debt, and slowly adding to your emergency fund.
{Know someone paying off debt? Here are 12 practical ways to encourage them.}
Once you have paid off all significant debts, build up your emergency fund with the money you were pouring into paying off debt. If two people in the home work, usually a 3-month emergency fund is sufficient. If only one works, then a 6-month emergency fund would be better. Of course, once you hit 3 months, you can of course work towards a 6 month and then a year emergency fund just for your peace of mind.
Ultimately, the decision you make for the amount of your Emergency Fund is a highly personal one, but when in doubt be conservative and save more than you think you need.
We use a couple of different services for our Emergency Fund, because we have a certain amount that we can get to at any time, and then a larger amount that takes us 2-3 days to get to.
For our $1,000 true Emergency Fund, we use Capital One 360 Savings & Checking Accounts. We love this service because it meets ALL of the criteria we had in mind when shopping accounts specifically for our Emergency Fund:
- No Fees
- No minimum balance
- Free, Instant Transfer between Capital One 360 accounts (for instance, our checking and savings accounts)
- Free Transfer to and from external bank accounts, as well as mobile check deposit
- A really great mobile app
- A debit card that we can use to withdraw all $1,000 of our Emergency Fund at an ATM
- Uses the STAR ATM network so we can avoid ATM fees
- Competitive savings account interest rates
- The ability to automate deposits for free
If you want to check out Capital One 360 for yourself to see why we like them so much, you can find them at their website: CapitalOne 360
We also have $3,000 in an Emergency Fund Investment Account through Betterment. The instantly accessible EF above allows us to take 3/4 of our EF and invest it, so it’s not earning the small amount of interest that savings accounts offer. We use Betterment for this portion of our Emergency Fund because of these features:
- It’s only $100 to open an account
- The user interface is super simple – not complicated investing terms
- An investment advisor that helps us set goals and determine the best investing strategy
- No fees, as long as you continue to invest $100 a month (if you don’t, Betterment’s fees are very low)
- Plus, Betterment allows us to keep all our investments in one place, with accounts for 401k rollover, Roth IRA, regular IRAs, and name them whatever we want
If you would like to learn more about Betterment & see for yourself why we love using it, you can check out my review here, or go directly to Betterment.
Automate
This one simple thing can set you up for long-term success. Every paycheck, set up an automatic transfer of money to your savings. Setting aside a chunk of your paycheck consistently teaches you to pay yourself first. As a bonus, you will get used to not having the money going into savings, and learn to live off of less!
We do this in quite a few different ways, so I will summarize them here for you. If you are interested in learning more about any of the ways that we automate, either click the link to take you to the individual sites, or the link to my review of each service.
Digit.co
We just found out that in almost a year of using Digit.co, this service saved us more than $1,800 – and we didn’t even miss the money!
You can check out how Digit.co works here in my review, or check them out directly at their site, Digit.co if you are interested in learning more.
Betterment
As I said above, Betterment has no fees as long as you contribute at least $100 a month to your accounts. We do this in a creative way:
First, we budget amounts for insurance, investments, taxes, and more in our bill schedule. Then, we set up separate accounts for each of our savings goal (taxes, insurance, new car, retirement, etc) and automate the correct savings amount to Betterment each month. This way, the bill schedule reminds us that the withdrawal is coming out of our checking account, but the automation doesn’t give us the option to skip saving.
Capital One 360
We’re always looking for new ways to save – even in smaller amounts – and good ways to save more of my blog income. That is where Capital One 360 comes in. All of my self-employment income is deposited into a separate Capital One 360 savings account (you can have up to 26 free, nicknamed accounts through Capital One 360), we have another savings account for our $1,000 Emergency Fund, as well as a checking account to make transfers and deposits easier.
How We Work It: Each day we know a paycheck is going to be deposited into our checking account, we automatically schedule a withdrawal to savings the next day (allowing the check enough time to clear). Once we’ve accumulated a few hundred dollars in savings, we transfer it to Betterment. Right now, our withdrawal each paycheck is set a at $50, but it can easily be raised or lowered depending upon income and expenses.
Contribute To Your Employer’s 401K To The Maximum Match
If your employer offers a 5% match, when you contribute 5%, your employer contributes and additional 5%.
That’s free money! Let me give you an example:
Even on a modest salary of $35,000 per year, that free money adds up! Assuming that your salary stays the same for a 40-year career, you would contribute $145.83 (pre-tax) to the 401K per month. Over the course of a career, that is $70,000 BEFORE the portion your employer contributes and before interest! Accounting for the employer’s match and interest, at the end of 40 years (assuming a 5% return on the investment), you would have a whopping $443,929.08 – and all for only contributing $145.83 per month! Most people wouldn’t even miss that amount of money!
TheBottom line: Don’t leave free money on the table!
If you don’t have a 401K match through you employer, look into other self-managed 401k options, or IRAs such as a Roth IRA or a SEP IRA if you’re self-employed (Betterment offers ALL of these). Even if a 401k match isn’t an option for you, there are a lot of really great options out there to help you jumpstart saving for retirement, so don’t lose hope!
{Want to invest but don’t know where to start? Check out these 4 ways to invest with only $100}
Max Out Your 401k
Yes, there is a difference between contributing to the maximum amount of the 401k match your employer offers, and maxing out your 401k contributions for the year.
The IRS sets limits on the amount of before-tax income that you can put into your 401K per year. For 2013, that cap is $17,500, and it will stay the same for 2014. Max out your contribution and save more money! (See the 2016 limits here)
{Don’t waste time! What you need to know about investing in you 20’s}
If you’re feeling confused, your employer’s HR department should be able to help you figure out just how much you can contribute to your 401k per paycheck, but even if you don’t have time to figure it all out, start by contributing something, and then work out the details when you have the time.
Prepare A Will
We are still young, right?
True, but we are not too young to think about preparing a will. Disaster can strike at any moment, and if you, like me, are concerned with becoming financially responsible early on in life, even an early disaster could mean you have significant assets that need to be distributed.
Preparing a will can help you think though important issues like beneficiaries, who would take your children should something happen to you, and take stock of your assets. It’s a morbid topic, sure, but one that you really NEED to think about before it is too late.
If you own quite a few assets, such as investment properties or have quite a few dependents, it is probably best to visit an attorney to have your will prepared. But if your financial situation is relatively uncomplicated, then a simple online will preparer will suffice, such as LegalZoom.
{Which is the best online will creator?}
Reduce Debt Drastically
This one is a hard one, especially if you have a lot of debt, and to make matters worse, everyone has their own method.
Dave Ramsey is known for his method to reduce debt, as are many other gurus. At the end of the day, you have to use the method that works for you.
You can use the debt snowball method, where you pay off the smallest debt first and work your way up to the largest. Or you can use the debt avalanche method, where you pay off the debt that is at the highest interest rate first, and work your way to the lowest interest rate. Whatever you choose, be confident in your choice and the knowledge that you are making progress!
Personally, we used a combination of both methods in 2015 when we paid off $24,000 of debt on a $30,000 salary, first paying off some small debts to build up momentum, and then moving on to paying off debts with the highest interest rates. We also refinanced some debt, ultimately saving ourselves $35,000 in interest, and taking 15 years off of the life of our mortgage.
Check out these resources to help you pay down debt:
- How We Paid Off $24,000 of Debt in 2015, on a $30,000 Salary
- 6 Things You Should NEVER Say To Someone Paying Off Debt
- Know Someone Paying Off Debt? 12 Practical, Encouraging Actions To Help Them On Their Journey
- 5 Things I Won’t Give Up To Get Out Of Debt
- 11 Things You Should Know When Paying Off Debt Gets Hard
- 5 Things I’m Giving Up To Get Out Of Debt
Work On Your Credit
How do I say this?
Building credit is hard, and it is a long process. Basically, though, pay off your credit cards in full every month, make all debt and recurring payments on time, and have several diverse accounts. A checking account, savings accounts, credit card, investment account, and a mortgage, is a good place to start. I could write about credit scores for days, but for more information, see this post from Mint.com.
It’s also a good idea to keep track of your credit scores on a regular (but not too frequent) basis. Personally, I keep a spreadsheet of credit scores from these free sources. When I check them, I look for abnormal activity such as accounts that I did not open, or inquiries made that I did not request.
Then, each year we request our credit reports from all 3 agencies, and although they do not provide an actual credit score, these reports provide an incredible amount of detail that creditors see. Scrutinize these reports each yer and look for ways to improve (like with this handy tool) so that when you hit your 30’s, your credit will be rock-solid and ready to go. You can request your free credit reports once a year from AnnualCreditReport.com.
{Why every family can afford an investment property}
Prepare For Future Events
Do you want to buy a house? Have a big wedding? Have children? Travel? Start planning now for those things that you want down the line. Saving money for them now will not only teach you to live on less, it will make those events much easier down the line.
Also, during this time you should work on adjusting your perspective to be one of saving money and not living above your means. Learn to avoid debt so that when you have the opportunity to start a family or take the trip of a lifetime your finances will be ready too.
I have quite a few articles that can help you prepare for those big events. You can learn more by clicking on the ones that apply to what you want from your life:
Babies/Family
- 47 Ways To Save $10,000 on Your Baby’s First Year
- How To Save 80% By Making Your Own Baby Food
- How We Scored 2 Years of FREE Diapers & You Can Too
- 1 Year of Free Wipes
Buying a House
- How We Bought A House At 22 – 5 Part Series
- How Much Money Do You Need To Save For A House?
- Don’t Let Your Dream Get You Down: 18 Ways To Save Money Building Your Dream Home
- 10 Reasons To Buy A House
- 4 Reasons NOT To Buy a House
Travel
- Travel Hack: Timeshares for Cheap!
- How We Vacation For Pennies
- 7 Tips For Planning a Frugal Disney Vacation
- 6 Budget-Friendly Vacations
- Would You Listen To A Timeshare Presentation To Get A Discount on Vacation?
{Why I’m Not Paying For My Daughter’s College But She’ll Still Graduate Debt-Free}
Determine Your Priorities
Setting yourself up for financial success does not have to mean living unhappily.
{Related Reading: The Truth About Living Within Your Means}
You still need to enjoy life!
Determine what things are important to you, money aside. Some people place a high value on their morning latte, expensive thought it may be – and that is ok! Someone else may value having an excellent wardrobe. Find something that you really love and prioritize it a bit, even if it means spending less money in another area in order to afford it. And remember, not everyone’s priorities will be the same, so don’t judge others for their choices!
How many of these things have (had) you done before 30? Share your victories (or regrets) in the comments!
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This post may contain affiliate links. See my disclosures for more information.
SavvyFinancialLatina (@SavvyFinLatina) says
These are great tips! I started maxing out my 401K over the summer and found I didn’t really miss the money. Wish I would have started from the beginning, but I think we are doing pretty well for our age.
retiredby40blog says
We are! Good thinking maxing out your 401K….not doing so leaves free money on the table! I am also glad to hear that you don’t even miss the money!
Thanks for stopping by!
tropicaltimes says
Great advice!
jefmiles says
I am confident that I have achieved most of these @24 (not to brag) I also have the goal to “retire” by 40.. Out of interest, what would you do once you reach your goals? What is the end game/goal?
I may have missed an earlier post, but am curious + love personal finance :)
Jef
retiredby40blog says
You should absolutely brag! I have achieve almost all of them as well and feel like I am really “ahead” of my peers. Way to go! I really want to achieve financial freedom so I can have options and freedom – even though I love working and probably will not quit, It would be nice to have the freedom to spend more time with family and pursuing the things I love :-)
What about you? Why to you have a retired by 40 goal?
Jef says
Only realised this comment now, thanks for that :). I used to brag about a lot of things and am keen to be a bit more humble now that I am slightly (not much more) older ha.
Absoultely, completely agree with you there, I love travelling and the flexibility to do what I would like with my time. Plus really want to focus on what I am passioante about, which is helping others with their careers (discover their passions)..
Interested in guest posting, would love to have you on my site :), although I am actually launching this week, looking forward to it
Mel @ brokeGIRLrich says
I actually didn’t think I’d do too well on this list, but I seem to be chugging along alright. I’ll definitely never be able to max out my 401(k) while living in NYC and I totally don’t need a will, but I’m doing ok otherwise.
I guess the goal now is wind up needing a will, huh? ;o)
[email protected] says
Nice job maxing out the 401K! NYC sounds like fun, too!
Addison @ Cashville Skyline says
I would absolutely max out an employers 401k if I had the option! Instead I’ve been piecing together my own retirement plan without the tax advantages. I’ll have to figure that out eventually.
[email protected] says
I don’t have the option either, so I feel you! You know what you’re doing though, and I’m sure that your “piecing together” is more together than you realize!
Rubyrose91 says
I am 23 and have done all these but set a will, I have had auto deposits into my savings before but find I really enjoy moving the money myself.
Gretchen says
Awesome! It sounds like you’re well on your way to a solid financial future!
Reece says
Great article :)
I’m 25, and 30 does still seem a long way away. I was really pleased to see, though, that I’ve managed to achieve most of the items on the list- awesome. My retirement plan is property, so that’s where my spare money goes now, instead of a retirement fund; each to their own, isn’t it.
Thanks for a great read!
Maureen @ A Debt Free Stress Free Life says
I’ve done all of them except fully funded my retirement. I’m 53 and am semi-retired so I didn’t make it at 40 but I’m still happy with my progress. Of course if I could do things differently, I would have funded my retirement more aggressively so I could have retired at 40.
Janneth says
This is a very helpful tips! I like most is the Automate, I will definitely do this regularly. Thanks for sharing!
Gretchen says
Thank you!
Dave Russ says
I looove the advice shared on this post. A lot of people really need to learn to manage their respective finances so that, as early as possible, we all could make our money work for us. Thank you.
Amanda @ The A&J Muse says
The one thing I’d love to focus more on out of this list is my debt. I’ve been able to save up a substantial emergency fund but have a massive student loan I need to repay back. Having said that, it’s the only debt I have which I’m proud of, so it will be much easier to focus on.
Amanda