“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 May 7, 2019
How to Invest for Retirement (The Smart and Stress-Free Way)
When it comes to stocks, I bet you feel like you have no idea what you’re doing.
Everyone who’s not a financial expert has been there. I’ve been there. But, time is passing and you need to be crystal clear with how you’re investing for your retirement.
Otherwise, it’s back to work until you can afford not to. So, how can you invest for retirement when you’re not a financial expert?
You take the time to learn the fundamentals well. If you do, you can grow your wealth and retire happy. The best part is that you don’t need to be a financial expert to make smart investment decisions.
Here’s how to invest for retirement the smart and stress-free way:
1. Know Clearly Why You Invest
Odds are you already know why should invest for retirement.
But, maybe you know the wrong reasons. It’s time you get clear on why you’d like to retire. Here are some questions to help you get started:
- Will you spend more time with your family?
- What does retirement mean to you?
- Are you looking to launch that business you’ve been holding off for years?
Everyone wants to retire but not for the same reasons. Once you’re clear for why retirement is important for you, you’ll focus on making it happen.
Investing in the stock market allows you to take advantage of compound interest. All this means is that your money earns money on top of its interest. A reason why investment in the stock market is one of the best ways to plan for retirement.
2. Figure out When to Invest
“The best time to plant a tree was 20 years ago. The second best time is now.”– Chinese Proverb
It’s true if you’d had started investing when you were 10 years old, you’d have a lot more money than you do today.
The reality is that most people don’t start investing until it’s too late. So, if you’re currently waiting for the perfect time to start an investment, it would be today. Open your calendar and block out 2 to 3 hours to choose how you’ll invest for retirement.
A quick way to get a snapshot of where you stand is to use Personal Capital. Input all your personal information and spend some time setting your retirement goals. Once completed, you’ll know where you stand with your retirement.
Having a savings account for retirement isn’t planning for retirement. Why? Your money loses value when you factor in US inflation.
3. Evaluate Your Risk Tolerance to Create the Perfect Portfolio
Investing your money well depends on your emotions.
Because when the market drops most people panic and withdraw their money. On average, the US stock market yields an annual 6% to 7% ROI (return on your investment.) But, this won’t happen if you’re worried about short-term loses.
Before you invest your next dollar, know your risk tolerance. Your risk tolerance determines the number of risky and safe investments you’d have.
Regardless of your investing style, you need to view investing for retirement as a long term game. Know that some years you’ll lose money but recoup this in the long-term.
Avoid watching market-related new. Also, create a double authentication to log in your investment account. This way you’re less likely to withdraw your money.
4. Open a Reliable Retirement Account
Depending on your circumstance, you may need to open a new brokerage account. This is the account is where you’ll invest your money.
If you’re currently working for a company, odds are that they offer a 410K investing account. If so, here’s where you’ll invest most of your money. The only problem with this is that you’re limited to the stock options that are available.
You do have the option to open a separate IRA (individual retirement account.) Here are some of the best brokers:
- TD Ameritrade
- Charles Schwab
5. Challenge Yourself to Invest Consistently
Committing to invest for retirement is hard, but continuing to do so is harder.
Once you’ve started investment for your retirement, you run at risk from stopping. Often you’ll want to contribute less, so you’d have more money in your pocket.
That’s why it’s important that you create a budget that allows you to invest each month. If you’re working for a company, you can set a percentage for the amount you’d like to contribute each month. Most people by default contribute 1% but aim to contribute 10% to 15%.
Be the judge for how much you can afford to contribute after covering important expenses. To stay motivated, use Personal Capital to view your net worth.
A benefit to contributing money to your retirement account is not taxed. For example, if you earn $100 and invest 10%, you’d contribute $10, then get taxed on the remaining $90. As of 2019, the most you’re able to contribute towards your 401K is 19K but this can change.
6. Consider Where to Invest Your Money
The most common way to invest your money is in stocks, but it’s not the only way. Here are other ways to invest:
Robo-advisors are fancy algorithms that’ll choose the best investments for you. Sites like Wealthfront make it easy for first-time investors to invest their money. You’d input information about yourself and set your risk tolerance.
Then, set your monthly contribution amount and your robo-advisor would do the rest. Robo-advisors charge a fee to manage your money, but less than regular advisors.
Think of bonds as “IOUs” to whomever you buy them from.
Essentially, you’re lending money and charging interest. Like stocks, not all bonds are equal. Some will be riskier than others depending on their rating.
Here are the different types of bond categories:
- Treasury bonds
- Government bonds
- Corporate bonds
- Foreign bonds
- Mortgage-backed bonds
- Municipal bonds
Picture a group of people dumping all their money in a jar that’s managed by a professional. This is how mutual funds work. The fund manager manages the money looking to earn capital gains (interest.)
One of the best types of mutual funds is index funds. Since these funds don’t try to beat the market and instead follow it, they need less research. Because of this they often charge the lowest fees and yield the best long-term results.
Yes, buying a home is an investment when done correctly.
Imagine buying a home and using it as a rental property. After repairing it, you receive a monthly surplus check of $100 to $200.
This may not sound like a lot, but repeat this process enough times and you’d earn a large amount of passive income. That’s why real estate is one of the best investments to not only retire but become wealthy.
But, it requires a lot of money to start and you should expect losing money along the way as you learn the process.
Your money can still grow in a savings account. Nowadays most online banks offer a 2% annual return. Although the average inflation is higher your money will be available when you need it.
7. Master Disincline to Dodge Short Success
Investing for retirement is a long-term strategy. That’s why you need to master delayed gratification. All this means is delaying short-term pleasure for something bigger in the future. Research shows that those who have delayed gratification are more successful.
So how can you master delayed gratification?
Think back to what retirement means to you. A clear purpose will help you avoid withdrawing your money during a market downturn. It’ll help you contribute more towards retirement when you’d want to waste it instead.
Your journey towards retirement will be long, so reward yourself along the way. Choose a reward that’s relevant and meaningful, so that you reinforce positive behavior. For example, after contributing more towards retirement, treat yourself to dinner.
8. Aggressively Invest on This One Investment
I’ve mentioned several types of investments but haven’t covered the most important one.
It sounds cliche but here’s why you’re your best investment towards retirement. The more you know, the more money you’ll be able to make. The more good habits you adopt, the more secure your retirement will be.
More importantly, investing in yourself is an investment that no one can take away. There’s no market downturn nor tragic circumstance that’ll wipe your knowledge and experience.
But, how can you invest yourself?
Reading books, blogs, and anything that’ll help you learn new topics daily. Listen to podcasts and audiobooks on your commute to/from work.
Save money to buy courses and hire coaches. I used to believe hiring coaches was a waste of money when I could learn the subject alone.
But, coaches see your blind spots and hold you accountable. Hiring the right coach will help you achieve your goals faster than you would’ve alone.
Retire Happy with Excess Money
The key to a secure financial future doesn’t only belong to financial experts.
It’s possible for you and I. What if you were able to retire earlier than most people and weren’t a financial planner? What if you were able to focus on what you enjoy doing the most while your money was working hard for you?
I know this sounds impossible now, but the truth is you’re capable of taking charge of your retirement. I’m not a financial expert but I’ve learned how to invest my money by reading books and learning from others.
Investing your money is scary. So start small and invest a small amount of your money with a robo-advisor. Feel your money drop and rise for a month or two. Then, invest more and keep this up until you’re aggressively saving for retirement.
One day, you’ll wake up with a net worth you’re proud of – confident about your retirement. You now know a few strategies you can use to invest in your retirement. Will you take action to retire happy?
More Articles About Making Wise Investment
- How Much Money Do I Need to Retire? Find Your Answer Here
- 10 Ways To Invest Money While You Have A Full-Time Job
- 3 Valuable Ways to Invest in Yourself
- 5 Reasons Why You Should Invest In Self-Education
Featured photo credit: Matthew Bennett via unsplash.com
|||^||Investopedia: Investing 101: The Concept Of Compounding|
|||^||US Inflation Calculator: Historical Inflation Rates|
|||^||Vanguard: Investor Questionnaire|
|||^||Money Check: What are Robo Advisors & Which are The Best Ones?|
|||^||The Street: Types of Bonds: 7 Bond Types Explained|
|||^||APA: Delaying Gratification|