13 things you should accomplish with your money before turning 30
When it comes to managing money, time is on your side in your 20s.
A head start on saving and investing could mean huge financial gains in the future.
To help you optimize this decade, we've come up with 13 milestones to aim to achieve before hitting 30:
Build an emergency fund.
Life is full of unexpected (and oftentimes, costly) surprises — that's why it's crucial to build an emergency fund.
The amount of savings you need is highly personal, but a general rule is that it's smart to have three to nine months' worth of living expenses tucked away. Of course, you may need more or less depending on your situation.
By age 30, you should be at, or well on your way to, that three to nine month mark.
Negotiate your salary.
You can't sit around and expect a raise or bonus to fall in your lap — even if your boss notices your hard work and efficiency, he or she won't necessarily pay you more. You have to ask for what you want.
As personal finance expert Farnoosh Torabi, who doubled her salary at age 26, preaches, "You don't get what you deserve. You get what you negotiate."
There's a right and a wrong way to go about this delicate conversation. Read up on things you should never say in a salary negotiation, know what you're worth before heading into the meeting, and consider tips from a 28-year-old woman who made a $30,000 leap.
Contribute at least 10% of your income to a retirement account.
Retirement is never too far off to neglect, especially since time is on your side when you're young. In fact, when you start to save outweighs how much you save, meaning your 20s are a critical decade.
Many experts recommend putting aside at least 10% of your income. That may not be possible when you're first starting out your career, but it's a good goal to have by age 30.
Get in the get in the habit of upping your contribution on a consistent basis — either every six months, at the end of each year, or whenever you get a pay raise — and work your way up to a 10% contribution or more.
Establish savings goals and start setting aside money for big purchases.
There are bound to be big expenses in your future — a home, car, vacation, and kids, to name a few — that require diligent saving.
The best way to prepare for these expenses is to create savings goals, and then set aside money as early as possible. You'll want to adjust your budget so you can contribute a specific amount of money (depending on your upcoming purchases and time horizon) into a savings account each month. Treat this money like a fixed cost, meaning you must set it aside like you would do for rent or utilities.
Pro tip: Set up automatic transfers from your checking account to your savings accounts so you never even see this money and learn to live without it.
Establish wealth goals.
In addition to savings goals, you'll want to establish goals for your annual income and net worth.
Money won't just appear — you have to work at it. If you want to eventually build wealth, you have to have a clear and specific goal in place before forming a financial plan to achieve that goal.
Be realistic when setting a time frame to attain these bigger wealth goals, but at the same time, think big and don't be afraid to challenge yourself. A distinguishing characteristic of rich people is their commitment to setting high expectations.
Buy the insurance you need.
Nobody wants to deal with insurance — it's complex and confusing — but by 30, you should have the coverage that's right for you.
That means health insurance, renter's insurance (or homeowner's if you have your own place), auto insurance, and disability insurance — and depending on your situation, it may mean life insurance or pet insurance.
It's also smart to make a habit out of reevaluating your insurance plans each year to ensure your coverage is still working for your needs and budget.
Set up a method to start tracking your expenses.
By age 30, you should have a very good idea of how much money is coming in and how much is going out.
Apart from making sure you're earning more than you're spending, you'll want to get a good idea of whether or not you're on track with your savings and retirement goals. You'll also want to see if there's any room to reduce spending and up your saving.
Strategies to track cash flow include recording each and every purchase you make in a spreadsheet or notebook, or downloading an app that will categorize and monitor your monthly and annual spending, such as Mint, You Need a Budget, or Personal Capital.
Pay off some of your student debt.
Student loan debt in particular is often blamed for preventing young people from buying homes and growing their wealth, so the sooner you can start living debt-free, the better.
Plus, the longer you wait to pay it down, the more you'll owe, thanks to interest. Interest works in your favor with your savings and to your detriment with your debt, when it can build up over time and sometimes end up costing more than what you originally borrowed.
If you aren't sure where to start, consider the advice from 13 real people who paid off thousands and simple steps to take to get out of any debt.
Experiment with a side hustle.
It's easy to focus on cutting costs and forget about earning, but the wealthiest, most successful people develop multiple streams of income.
Earning more money is often easier said than done, but most people have options. Read about 50 ways to bring in additional income, some high-paying jobs you can do on the side, how you can earn passive income, and how to start a side-hustle from a woman who earned up to $4,000 a month on the side.
Plus, it's good to experiment with being your own boss, rather than working for your money. After all, there is a significant difference between how rich people and average people choose to get paid.
Invest in something other than your retirement savings plan.
Many experts recommend using investment vehicles in addition to your employer's retirement plan to ensure you'll have enough to fund your golden years.
If you're maxing out your 401(k) plan, consider contributing money towards a Roth IRA or traditional IRA, research low-cost index funds — which Warren Buffett recommends — and look into the online investment platforms known as "robo-advisers."
Of course, you'll want to make sure your general finances are in order before you invest — but if you have a sound emergency fund, have prepared for future expenses, and are debt-free, the quicker you put your money to work and jump start its growth, the better.
Establish a strong credit score.
Your credit score, which you can check as often as you want through free sites like Credit Karma, Credit.com, or Credit Sesame, is a three-digit number between 301 and 850 based on how you've used credit in the past.
Generally, you don't want your credit score to dip below 650, as potential creditors in the future will consider you less trustworthy and less deserving of the best rates.
While often overlooked or forgotten about, building good credit early on is essential. It will allow you to make big purchases in the future, such as insurance, a car, or home. Start by selecting a good credit card and then focus on establishing smart credit card habits.
Make your payments automatic.
In today's technologically savvy world, there's no excuse to ever miss a payment.
Most bills can be paid online, and you often have the option of setting up automatic payments. If you automate consistent payments for fixed costs — cable, internet, Netflix, and insurance — you won't have to think about them every month and will never miss a bill.
You can do the same for variable costs such as credit card bills, although you'll want to check in on your account regularly to make sure things are going smoothly and there aren't any signs of fraud.
For payments that can't be made online, such as rent, set up calendar reminders and get in the habit of paying them around the same time each month so it becomes routine.
Invest in yourself.
The wealthiest, most successful people are constantly exercising their brains and looking for ways to continue learning long after college or any formal education is over.
Self-educate by enrolling in a course, attending a work-related conference, or investing in books. On a similar note, invest in your health — consider pursuing an appealing form of exercise, or anything else that will better your health and strengthen your mind.
As self-made millionaire Daniel Ally, who reached millionaire status by age 24, emphasizes: "You must take your education into your own hands if you want to prosper. Invest in yourself."
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