Financial Goals to Reach Before You Turn 30
When you're in your 20s, you go through a lot of changes. You will graduate from college and start your first job. You may move onto a second job and work your way up the career ladder. You may return to graduate school to get a master's degree. On a more personal note, you may get married and start a family.
It is difficult to set milestones for this decade because people take different career and life paths. However, these five goals will benefit you no matter which direction your life takes. If you take these steps and follow a financial plan, you will be on the way to being financially successful throughout your life.
Get Out of Debt
Although you may not be able to pay off your entire student loan balance by the time you are 30, you should take the steps needed to work toward that. You should also pay off any credit card debt you have.
When you manage your debt well and pay it off, it opens doors for the other steps in your life, like owning a home or purchasing a new car. Take the time now to set up a debt payment plan so that you can get out of debt.
If you have large student loan payments, look into one of the options that can help you have some or all of your student loans forgiven.
Plan for Retirement
Starting with your first job, you should begin saving 15% of your pre-tax income for retirement. If you begin doing this at your very first job, you will start amassing a good-sized nest egg early. Plus, once you get into the habit of putting this money aside, you won't even miss it.
If you decide to leave the workforce to pursue a continuing education degree, the money in your retirement account will continue growing. Then, you can begin contributing once again once you reenter the workforce.
Save for a Down Payment on a Home
While saving 20% for a down payment on a home has a lot of benefits, it's not always the right choice. Either way, you'll likely need to save some cash to cover a down payment if you want to buy a new home.
Depending on your life choices, you may purchase your first home in your 20s, or you may wait until you are in your 30s. It depends on your situation, single or married, and career choices. However, saving this money will help you be ready when the time comes.
Focus on Your Career
This is a great time to establish a solid career. Take the time to create a solid professional network and to consider all of the options that are available to you. Your 20s are a great time to explore different options.
If you are single, you can move to different cities to pursue your dream job, and you can also really focus on establishing a good reputation. This can help you if you decide to start working as a consultant or freelancing as your family situation changes in the future.
Establish Good Financial Habits
It's important to take the time to establish good financial habits in your 20s. This means managing your credit well and fixing any mistakes like late payments that you have made in the past. It means creating and following your budget every month.
Establishing a good emergency fund can help you handle things like a surprise layoff or sudden illness without going into debt.
If you have the foundation of good financial habits set, it will be easier to keep moving forward as life gets more complicated with kids, relationships or career moves.
Updated by Rachel Morgan Cautero.