For some reason we’ve convinced ourselves that the decade birthdays are the “big benchmarks”, 20, 30, 40, 50, etc. Most of us develop habits that seem fine in our 20’s but, once we hit the 30 mark we realize they aren’t so flattering. You may have already heard these several times but… Financially speaking below are 5 areas of your financial life you need to clean up before age 30!
1. Use Credit Cards Responsibly
Remember when signed up for your first credit card in college? You traded your financial freedom for a free t-shirt. A few weeks later, you had maxed out your $500 limit and quickly realized you really didn’t have any way to pay that money back! Well, adults still make those same mistakes, unfortunately past the age of 30. Credit card debt is a real problem for many adults. If used responsibly credit cards can be a great too; however use them wisely. Don’t max out a credit card never use more than 20% to 30% of your limit!
2. Invest, Invest, Invest
Ideally, you will have already started investing in your retirement. However, the fact is that a small portion of us actually start when we get our first job. It’s tough for someone in their 20’s to start saving for something that’s almost 40 years away, but it’s necessary. You’ve probably already heard this but, if you have the money pulled out of your check before you get it you won’t miss it. Compounding interest works best when it has many years to compound. Invest $66 per week for 40 years and odds are you will be a millionaire when you retire!
3. Learn to create a budget and stick to it
Another tip that may seem obvious to some but difficult for other to grasp is creating a budget and actually sticking to it. Before you can get your finances in order you have to understand how much money you have coming in each month and how much money you spend each month. Creating a budget just consists of assigning into categories where the money goes each month. This will prevent you from getting to the end of them month and coming up short. Need a simple budget to get you started? Download our simple free budget.
4. You need an Emergency Fund
A good starter emergency fund should consist of about $1,000. This fund should be in an account separate from your regular checking account; however, somewhat easily accessible. A regular savings account would be a great choice. Your emergency fund should only be used… you guessed it, in case of an emergency. Pulling money from the emergency fund for a late night Taco Bell run when your checking account is empty doesn’t constitute an emergency. Although I do love some Taco Bell, you’re going to have to opt for whatever you can find in the fridge. The emergency fund can be used for car repairs, necessary home repairs, even an unexpected medical bill. However, your goal the following month/week should be to start replenishing the fund. An emergency fund helps keep your monthly budget balanced and uninterrupted.
5. Get some type of education
It’s a proven fact that on average a college graduate will earn more over their lifetime than a non-college graduate. I however am not going to push you to go to college if it’s not the right course of action for you personally. However, I would highly suggest that you get some type of education past high school. There are many options available today that can provide you with the skills to make you more marketable in the workplace. Do some research into trade schools and other online schools that can give you an edge over the competition.
Already over the 30 mark? What advice do you have for the younger crowd?