You might have heard the expression – Life begins at 30. It’s true. With all the responsibilities of life all seeming to arrive at age 3-0, you need to on top of your money game or life could get really tricky.
Here are some financial milestones to shoot for by the time you turn 30.
1. Be Financially independent
By the age of 30, you should be financially independent of your parents, settled well into your career and able to support yourself financially. Your job is your major financial asset and the one that generates the most income for you. The most important thing is that you have started establishing yourself.
2. Good credit history
Credit is easy to get and easy to abuse. This can be achieved by living within your means, paying your bills on time and not depending solely on credit and the plastic!
3. Kick-starting your retirement savings
Ideally, every 25-year-old should be saving one-third of their salary every month to save enough for their retirement nest. However, if you find yourself without a retirement plan at 30, it is never too late to start. First, determine how much you need to retire comfortably, taking inflation into account. You should have two-third of your last drawn income every month after retirement if you don?t want to downgrade your lifestyle post-employment. Start saving now and increase your contributions when your income rises or when you have achieved more of your short-term financial goals.
4. Becoming an investor
Your idea of saving and investing should be beyond a basic savings account. Although you may have not accumulated wealth for rather big investments, you could very well invest in a unit trust or buy stocks with just a thousand dollars! As time and circumstances change, your financial needs might change as well. Therefore, it is important for you to learn to rebalance and readjust the allocation of your investments as and when necessary to accommodate the changes in your financial needs and attitude towards investment risks.
5. Establish emergency funds
The general rule is to have enough emergency fund stashed to cover six to 12 months of your monthly expenses. This fund will be useful in covering up monthly expenses and debt repayments in case of unforeseen circumstances such as loss of job.
6. Adequately insured
Part of being a responsible adult is financially protecting yourself, and that includes obtaining the suitable insurance that you will need ? life insurance, medical or health insurance, and personal accident insurance.
7. Having a budget
Having a budget help you to keep your strategy in mind in order to achieve your financial goals. Be it getting married in two years or buying your first home next year, without a clear plan, your chances of achieving your goals is slim.
8. Know your net worth
Everyone has a net worth and you need to be aware of your because it is the easiest way to get a big picture perspective on your finances. Your net worth is the total of your assets (bank account balances, savings, investments, etc.) minus your debts (loans, mortgage, credit card debt, etc.). At the age of 30, your net worth should be a positive number ? at a growing capacity.
9. Understand personal income tax
Understanding what tax category you are under and what are the tax reliefs, rebates andexemptions that you can entitled to, means more money in your pocket every year. Make sure you are claiming all other available deductions in a way that ensures you pay the least amount of taxes possible.
10. Buying a property
Even if you have not actually realised this milestone yet, you should be aware of the processes and what you need to do in order to successfully buy one. There are various factors you need to consider other than your affordability when buying your first property.
If you are in deep credit card debt, have no life insurance and saving for retirement seems like a fantasy, you still have three decades of working life ahead to sort yourself out. It is never too late to start.
But make a commitment to get this area of your life handled, because he who doesn’t care about money will soon have none.
Finally, here’s a parting quote from Warren Buffet – “If you spend money buying things you don’t need, soon you’ll soon have to sell things you need for money.”
We’ll see you at the top!
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Click here to join him at this ALL NEW event.[/column]