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10 Financial Goals To Pursue Before You Reach Your 30s

10 Financial Goals To Pursue Before You Reach Your 30s

Have you set your financial goals? Being in your 20s is an exciting time – you finally have the freedom to set your own rules, and you understand the value of independence. However, a big part of independence is being able to support yourself financially.

It is a great feeling knowing you are on track with your money, and now is the perfect time to start working towards financial security.

Check out 10 financial goals to pursue before you turn 30.

1. Focus On Paying Off All Of Your Debt

This does mean all of your debt; student loans, credit cards and any auto debts. All of these payments come with interest, and some of the interest is very high. Focus on paying off your debt first; the repayments and interest will keep sucking up your money until they are totally paid off.

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Paying off your high interest debt makes hitting financial goals and saving money much easier, and you will feel great once you have made that final payment!

2. Create A Monthly Budget Plan

Saving and paying off debt is much easier when you have a budget plan in place. When you have a free evening, sit down and write down all of your earnings and expenses. Set money aside for rent, bills, food, entertainment, paying off debts and savings.

When you have a set amount of money to spend, you will notice you are saving money without having to think about it too much.

3. Stop Impulse Spending

Impulse spending can decrease your savings – as well as often being a waste of money! Before you buy yourself something, ask yourself these questions; Do I need this? Why? Am I paying for this with my weekly allowance, or with my savings?

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A good rule of thumb is if you are paying with your savings, put it down. If you are paying for it with your weekly spending budget, come back the next day and buy it then if you still want it.

4. Set Career Based Financial Goals

It is likely you already have plans to advance your career and earn more money, but writing these plans down can help you to solidify them, as well as motivating you to work towards them. Try to set a rough time limit to achieve them, as this way you can check that you are staying on track.

5. Get Rid Of One Luxury

Most people have a few luxuries or treats they regularly buy. Try to track your spending for a month and see if there is any money that is being wasted.

For instance, many people buy lunch or coffee every day, but swapping to homemade can make a big financial difference. Try to cut out one luxury, and save the money instead. Keep your other treats as a reward for your savings!

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6. Pay Your Bills On Time

One of the most important financial goals in your twenties is to pay your bills on time. Unpaid bills will leave you with bad credit, and they can pile up and become even harder to pay. Try to stay on top of the bill by setting up an automatic payment so you never miss another one.

7. Aim To Have Emergency Savings That Equal 6 Months Of Living Expenses

It may seem like a large amount of money, but through monthly saving you will eventually have enough savings to cover half a year of living expenses. The future is uncertain, and your life will feel less stressful if you know you have a safety net for worse case scenarios.

Try to also put your savings in a high yield account to benefit you financially as you save.

8. Save For A Home

It isn’t essential to save for a home in your twenties, but if you have paid off all of your debts it is often a smart idea. Saving up for a home takes a long time, and the sooner you start, the sooner you will be able to get on the property ladder – if that is something you are interested in doing.

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9. Invest Wisely

Investing is a useful way to increase your savings, but be sensible if you are going to invest. Seek guidance from trained professionals, and let them support and guide you whenever you make investment decisions.

Try to take notes, too, as they will help you to make your own financial decisions in the future.

10. Start To Save For Retirement

While saving for retirement might feel like something you could put off for another decade or so, putting a small amount of money aside each month will make a huge difference.

It doesn’t have to be much at this point, so take a look at your budget and see how much you can spare. Even $10 a month will help to set you up for the future.

A general rule of thumb is to try and save 5% of your wage, and slowly raise that up to 20% over time.

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Amy Johnson

Amy is a writer who blogs about relationships and lifestyle advice.

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Last Updated on September 2, 2020

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways to set financial goals and actually meet them with ease.

4 Steps to Setting Financial Goals

Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

1. Be Clear About the Objectives

Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

2. Keep Goals Realistic

It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

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4. Short Term Vs Long Term

Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

How to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a two-step process:

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

Ensuring Healthy Savings

Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

If you’re not sure where to start when tracking expenses, this article may be able to help.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

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Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

3. Make a Plan and Vow to Stick With It

Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

Nowadays, several money management apps can help you do this automatically.

At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

  • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
  • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
  • If you go shopping, always look out for coupons and see where can you get the best deal.

The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

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5. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

6. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

Making Smart Investments

Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

1. Consult a Financial Advisor

Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

2. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

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3. Compounding Is the Eighth Wonder

Einstein once remarked about compounding:

“Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

Use compound interest when setting financial goals

    Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

    Start saving early so that time is on your side to help you bear the fruits of compounding.

    4. Measure, Measure, Measure

    All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

    If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

    Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

    The Bottom Line

    Managing your extra money to achieve your short and long-term financial goals

    and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

    More Tips on Financial Goals

    Featured photo credit: Micheile Henderson via unsplash.com

    Reference

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