5 Milestones You Should Hit Before Turning 30
For many, turning 30 is a big milestone birthday that has them realizing that they are finally a responsible adult. They begin to think about financial matters and wonder if they are on the right path for financial stability and eventually retirement. While they likely won't work out everything in their finances by the time they turn 30, the sooner you begin, the better off you will be! Here are 5 milestones to hit before you turn 30!
- Have a Budget to Track your Expenses and Wealth. Many think of a "budget" as a dirty word with negative meaning, but it actually can be very freeing. If you track and plan for your spending, you will have the money you need for those special items you want and not have to feel guilty about purchasing them.
- Have Money in an Account for Retirement. You might not have much, but you should have some put away for retirement. That is especially true if your employer has an employer sponsored plan like a 401k where they match a portion of you contribution. If you don't put in enough to get the maximum match, you are leaving free money on the table. If you don't have an employer plan, you can open a Traditional or Roth IRA and start putting something away each paycheck. You can put as much as $5,500 a year or 100% of your earned income, whichever is smaller. Make it automatic and don't touch it! Little amounts add up over time.
- Have an Emergency Fund. You should also have some money stashed away in a money market or savings account for when those unexpected life events happen. Ideally, you should have 3-6 months of living expenses put away in the event of a job loss.
- Pay off your Credit Card Debt. Usually credit cards have higher rates of interest than most other debt, so it makes sense to pay those off first. Stop using your credit cards until they are paid off - then pay off any balance every month going forward.
- Designate Beneficiaries on your Accounts and Life Insurance. In order to be sure that your money goes where you want it to go when you die, you need to have designated beneficiaries on all your accounts and life insurance policies.
If you accomplish all 5 of these milestones by the time you turn 30, you will be well on your way to financial freedom!!