What are 5 Financial Goals by 30?
Navigating your 20s can be challenging with so many life changing events: graduating, first “adult” job, managing debt (student loans), the list goes on. Everyone’s journey is different, but I’m here to give you some solace on 5 financial goals by 30.
ICYMI, in this blog post, I went over the financial goals definition. Check it out if you’re wondering what those are, how you can easily come up with your own, and more!
- Create and contribute to your Emergency Fund (EF)
- Increase your income
- Decrease debt
- Save for retirement
- Build equity; save for property
Goal 1: Create and contribute to your Emergency Fund (EF)
What is an Emergency Fund?
An emergency fund is money set aside to cover unexpected expenses. These expenses can include unemployment, car fixes, medical expenses, and more. This fund is intended only for unexpected expenses, nothing else.
Why is an Emergency Fund important?
Life happens. As much as you try to plan, there will be unforeseen events that happen, some requiring you to shell out $$$ to fix. Emergency Funds offer a buffer so you can cover those unexpected expenses without dipping into your hard-earned savings. The amount held within an Emergency Fund will be different for everyone; the general recommendation is 3-6 months of expenses. However, as I’ve previously mentioned, do whatever you’re comfortable with.
For your Emergency Fund, it’s recommended for this fund to be very easily accessible. As you’ll need to be able to dip into this fund unexpectedly, and it needs to maintain its value during turbulent times.
With that in mind, it’s recommended to put this either in a regular Savings Account, or a High Yield Savings Account (HYSA). Check out this blog post if you want to learn more about HYSA!
Goal 2: Increase your income
Your first job out of college may not be as high paying as you always dreamt. However, there are ways to change that:
- Get experience, develop your skillset, and when the time is right, consider job hopping. On average, the salary increase is XX% when job hopping in comparison to staying at the same company.
- Pick up a side hustle: technology has come so far that some jobs only truly require internet connection. Check out this blog post for all of the possible side hustles. Obviously, there are more side hustles out there than what are listed in the blog post. That post is just a reference guide and inspiration.
- Walk dogs
- Tutor
- Contractor work (Fiverr)
- & more!
This is a great time to raise your income, because you likely don’t have dependents, no mortgage, nothing really tying you down. This is a wonderful time where you can be super flexible.
Goal 3: Decrease debt
Debt could mean any amount of money you owe: student loans, credit card, car loans, medical debt, etc. At this point, with your shiny new job, hopefully you’re making enough so you can stash extra $ to decreasing debt, if you have any. If not, feel free to skip to Goal 4.
However, if you are strapped with some loans, here are a few things to consider when it comes to tackling debt:
Snowball vs. Avalanche Methods
- What type of loan is it?
- How much do you owe?
- How long do you have to pay it back?
- What is the interest rate?
Create a list of all debts, list out all key information, and determine which method of tackling debt best suits you and your situation.
Goal 4: Save for retirement
Not sure what retirement account best suits you? Check out this post for a deep dive on one of the different types of retirement accounts!
If you have a 401(k) provided as an employer benefit, make sure to max this out! For example, if they do a 6%, dollar for dollar match, every dollar you contribute, your employer will match that up to 6%. So if you contribute over 6%, your employer will only match up to the 6% limit. This benefit varies with different employers, so be sure to check your employee benefits to find this.
If you’d like to contribute even more to your retirement, you can open a Roth IRA and contribute funds to that account.
Generally, it’s good to contribute a set amount of your paycheck to retirement funds, so that when you reach retirement, you have a nice nest egg available for you to use. I remember when I first started working, it was also when the older generation was reaching retirement, and a common theme was that many of them did not have any savings for retirement. I definitely did not want to be one of those people, so when I first started working, I dumped a significant chunk of my paycheck to plump up my retirement account. You don’t necessarily need to do what I did, but it’s important to always put some amount away into this account.
Goal 5: Build equity; save for property
So you’ve got your EF built, managed your debts, stashed money away towards retirement, and have extra funds leftover, huh? Congrats! This is a great position to be in! Now, depending on your timeline, you might want to go about this a few different ways. The general rule of thumb is that if you’re planning on purchasing within 1-5 years, that money should be kept in cash. However, if your timeline is a bit further out, you could consider investing it. Now, this option is riskier since any time you put money into the market, the value of the money will fluctuate. It’s the nature of the stock market.
To reiterate, the top 5 financial goals by 30 are:
- Emergency Fund
- Increase Your Income
- Decrease Debt
- Save for Retirement
- Build Equity; Save for Property
There you have it! The 5 financial goals by 30 everyone needs to know! Interested in seeing more? Check out this post for more info on a Roth IRA and how you can use this to save for retirement!
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