“Freedom and wealth is an outcome of “Time”; the most precious asset that we all possess. Time however is a variable to each individual as our actions from our choices determine the longevity and returns from this asset. To maximize the return on this asset is determined by the energy that we put forth in developing our financial education, relationships and health.”
In your twenties your future is too far away to think about and what is important is the “here and now”.
Your financial habits are not great, as you will have probably maxed out your credit card, delayed any savings and focused mainly on pleasure spending.
Your twenties are the time to have fun and its ok to make financial mistakes. However, the bad financial habits that you have accumulated in your twenties need to be gone before you head into your thirties.
Being in your thirties is different, you become more responsible and yes a little more serious about life.
Living in a cold damp house where it was party central every weekend doesn’t seem so appealing. The comforts of a warm centrally located apartment with your partner or a flatmate is the place you really want to be. You start to drink wine and your parties go from 100’s to dinner parties of 6! No police get called to your dinner parties!
You will find that children, family, marriage, buying houses are the main topics of discussion amongst your friends.
Shopping. Bills. More bills. Your health. Appointments. Money. Credit cards. Rent. Mortgages. Tax returns. Work. Some of these things were present in your twenties, and if you really wanted to ignore them you could but now you can’t.
If you make the right financial choices in your twenties, many of the thirty something life events become not so stressful and far more pleasurable. The reason why,is because you have a good financial base!
However, if you don’t make the right financial choices in your twenties, your life will be one of financial struggle – not only in your thirties but for ever.
“Money is only a tool. It will take you where you wish, but it will not replace you as the driver” Ayn Rand
By pursing these 10 Financial Goals before you reach 30, you will have set the foundation for you to enjoy financial security and independence for the rest of your life.
1. Know Your Personal Financial Profile
“When it comes to money and so many other things in life, understanding your weaknesses and strengths can help you with your future plans.” Tagene Brown-McBean
I know that this doesn’t look like a financial goal however it is the key to your success in achieving your financial goals. You need to know what your values and beliefs are around money.
What is your risk profile? Does spending money give you pleasure? Have you got good saving habits? When you see something you really want, do you justify to yourself how much you deserve it even though you cant afford it. Do you like credit cards? Are you ever able to pay your credit cards off in full every month?
Do you bury you head in the sand when it comes to dealing with money?
There are lots of financial personality profiles assessments on the internet and many of them are free. Here is a link to a great article on personalities and money. How Your Personality Affects Your Finances
Go and find out what your relationship is like with money. Then decide if you have the commitment, desire and motivation to pursue these financial goals before you turn thirty.
2. Write Down Your Financial Goals.
“By failing to prepare you are planning to fail” Benjamin Franklin
Once you have an understanding of your financial personality, you can then start to plan your financial future.
Write down your financial goals – short, medium and long term goals.
The timeframes you set for these goals need to be aligned to your financial personality.
Use the KISS and SMART metrics to write your goals. (Keep It Simple Smart) and (Specific, Measurable, Action, Realistic, and Time Bound).
This financial goal needs you to be disciplined and focused. If you struggle with these personality traits – thats ok. Find someone who can help you or go on the internet and look for templates that you can use to guide you to writing your goals.
Find out how to write your financial goals that are aligned to you and your current priorities in life.
If you don’t take the time to put a financial plan in place by the time you reach your thirties, you increase your chances of failing to achieve those financial outcomes that will enable you to live your dream life.
3. Stop Impulse Spending
“Remember, buying something is not the problem
Give up your bad habits around spending. The sooner you give up the habit of impulse spending, the better off you will be financially.
Try to understand why this behaviour is important to you as it does not serve you well. This behaviour does not support wealth creation. If you continue to spend impulsively your financial future going into your thirties and beyond, will be a struggle.
Don’t stop enjoying your life and spending money all together. You should be spending money on things that make you feel good. Just be realistic about your spending habits. If your spending is reckless and impulsive, then do something about it.
4. Get an App To Track Your Expenses
“There are plenty of ways to get ahead. The first is so basic I’m almost embarrassed to say it: spend less than you earn” Paul Clitheroe
If you are in your twenties and you have a negative perception or no motivation to budget or track your expenses you need to change right now.
Holding on to these beliefs will hold you back from having any financial security in your thirties and later in life. Keeping a track of of your expenses is one of the key financial habits that will enable you to have financial wealth and independence in your life.
There are some amazing budgeting apps that you can download. Go search for these apps as they enable you to budget and monitor your expenses with ease and no stress.
When you reach thirty it is essential that you are able to live within your means otherwise you will find yourself drowning in debt.
Remember your thirties will bring more expense and cost to your life. Good budgeting habits will ensure you are prepared to manage these extra costs and live within your means.
5. Learn About Investing
“Formal education will make you a living; self-education will make you a fortune”. Jim Rohn
To create long term wealth you need to become educated about investment.
The best time to start getting the basics sorted around investment and start building your wealth is now – as you head into your thirties.
With sound investment planning in your twenties you should have an investment portfolio up and running by the time you are thirty.
Investing in your future now, before you turn thirty, ensures that you will reap the financial rewards of security and independence for the rest of your life.Advertising
6. Learn How To Manage Your Debt
“Debt is like any other trap, easy enough to get into, but hard enough to get out of.” Henry Wheeler Shaw
Don’t borrow money to buy depreciating assets is a key rule to managing debt.
Debt can work in your favour, but only when you use it for things that tend to rise in value over a reasonable period of time.
Using borrowed money to invest in a house, a business or an investment (which includes your education) is the sensible use of debt. However you still have to pay the debt of and if you don have a plan to manage your debt, then interest will compound and your debt will triple.
Borrowing to buy a new phone, pair of shoes, TV, or car is not a smart use of debt.
Get rid of your BAD DEBT – credit cards, higher purchase or car payments. Avoid credit card debt like the plague.
There is a very simple rule to follow when you spending, if you have to borrow money for it, then you simply can’t afford it – that includes using credit cards.
7. Get Insurance And Start Saving For Emergencies
“The habit of savings is itself and education; it fosters every virtue, teaches self denial, cultivates the sense of order, trains to forethought and so broadens the mind” T.T Mauger
In your twenties the concept of an “personal emergency” is never thought about because it just doesn’t happen in your twenties. If an emergency occurs usually your parents will sort it out.
However that it all changes in your thirties and things like Life Insurance, Income Protection Insurance and Mortgage Payments start to appear in your lives.
You need to protect your future. Setting up a fund and getting insurance for you to call on in an emergency is a great financial goal to have underway as you enter into your thirties.
8.Stop Relying On Your Parents For Money
“You cannot help people permanently by doing for them, what they could and should do for themselves.” Abraham Lincoln
If you are still relying on your parents to financially support you when you are thirty, you should be worried.
I get that you may have a student loan and in your twenties your parents were your ATM machine however this is a bad habit to maintain as you go into your thirties.Advertising
It is pretty much guaranteed that if you have bad debt and still rely on a monthly allowance from your parents then your chances of having financial independence and creating wealth in your life will not happen.
That is your reality.
9. Start A Retirement Account
There is no way you would have missed all the hype that has been promoted about how important it is to start saving for your retirement in your twenties.
The book Get A Financial Life by Beth Kobliner focuses on helping people in their twenties and thirties get their personal finances sorted. In her book Beth Kobliner outlines an example to show how the power of time on your investments works.
“Suppose you set aside $1,000 a year from age 25 to age 64 in a retirement account that earns 5% a year (historically, stocks return about 8%, but we’ll be conservative). That’s $39,000 total you invest. By the time you turn 65, you’ll have $126,840. If you don’t get started with saving until you’re 35, you’ll only have $69,760. Starting just ten years earlier would have doubled your total. Yes, doubled.”
When you are investing in your future with the goal to achieving financial freedom, then time is your biggest ally. Start saving and investing now before you reach thirty.
10. Develop A Financial Abundant Mindset
“When we do what we love to do; when we are generous and seek to help others; when we live within our means and save money; when we always seek a more specialized knowledge…we then have an abundant mindset, and are bound to realize financial abundance”.
How you handle your relationship with money in your twenties will influence how you live the rest of your life.
Starting to develop a mindset that supports financial abundance, will help you to prosper in the future both financially and personally.
A person who has a financially abundant mindset is one who has developed knowledge and skills to acquire financial wealth however balances that with philanthropy and generous giving.
Pursing these 10 financial goals before you reach thirty will guarantee you financial security and independence for the rest of your life.
You have the power and the choice as you head into your thirties to create the life you desire.
I hope you choose well.Advertising
‘Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery” Charles Dickens
Published on September 17, 2018
How Being Smart With Your Money Leads to Financial Success
Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.
With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.
So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.
1. Avoid being “penny wise but pound foolish”
It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.
You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.
So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.
2. When you want something big, wait
Impulsivity can get you in trouble in most aspects of life. Finances are no different.
It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.
We get an idea in our head of something we want, and it’s hard not to go out and get it right then.
A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.
So, you get the itch.
You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.
Here’s where you have to take a step back.
Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.
Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.
It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.
The impulse faded. And you just saved yourself a ton of money.
3. Live smaller than you can afford
You finally get that big raise. And you want to celebrate – and why not?
You’ve been looking forward to this forever. And after all, it was all due to your hard work.
That’s fine, splurge a little. However, make it a one-time deal and be done.
Don’t get caught in the trap that just because you’re now making more money, you should spend more.
Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.
The fact is that living smaller than what you can afford is one of the fastest ways to build savings.
But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.
4. Practice smart grocery shopping
Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.
But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.
Create a grocery budget
Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.
Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.
I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.
Make a list… and never deviate
Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.
You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.
These impulse decisions will lead to overspending, which will derail your grocery budget.
Eat before going grocery shopping
It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.
If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.
After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.
Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.
However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.
This makes it much easier to stick to your grocery plan.
5. Cancel your gym membership
Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.
The average gym membership costs around $60 per month. That’s $720 a year.
Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!
I recommend seeking an alternative. One good alternative is to look into fitness streaming services.
Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.
Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.
For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.
Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.
There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.
It’s baby steps… And baby steps can start now!
I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.
Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.
The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.
Featured photo credit: Unsplash via unsplash.com