Are you in your 20s and need to improve your financial knowledge? Check out the 30 financial goals you should master by the time you turn 30!
If you got most of the items on this list, you are doing great! When I was on college, I didn’t really pay attention to my finances and wasted my money on stupid things. Now I’m in my late 20s and paying for those mistakes. These are all the things I wanted to share with you to prevent you from making similar financial mistakes.
It’s a pretty long article, but I hope you takeaway some valuable information.
The quickest way to become wealthy is knowing how money works. Get ahead in your finances by mastering all of the things on this list.
Disclaimer: I am not a financial advisor. I am not responsible for what happens to your finances. Please seek out a professional for in-depth financial questions.
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30 Financial Goals You Should Master:
Checking & Savings
1. Have at least 3 to 6 months emergency savings
When the pandemic hit, those who had 3 to 6 months of emergency savings had more time to adjust than those who had no savings at all. Some lost their homes, couldn’t pay their bills or weren’t able to afford food.
If you have a few months of emergency savings, this gives you time to look for another job if you are laid off or have a decrease in work hours. For emergency savings, you want to put the savings range by how much you spend each month.
So a month of savings should cover your rent, electricity and water bill, wifi, phone bill, tv services, transportation, etc. If that total is $2,800, then for 6 months of emergency savings you should have $2,800 x 6 = $16,800.
It might take a while to build that much money. You have to keep saving a portion of your paycheck each month to your emergencies.
2. Spend less than you make
If you’re always spending everything you make, you’re always going to be broke with no savings. It will be impossible to save for emergencies. And if you spend more than you make, you are setting yourself up for taking out loans and getting really bad credit.
Just because you get an increase in your salary, doesn’t mean you should get a more expensive car, house or lifestyle. Try to keep your expenses as low as comfortably possible and save that money to build your assets. Put that extra money in your investments and emergency savings.
The rich people you see living luxurious lives, many of them are spending all of their money. That’s why a lot of celebrities go broke in older age. A luxurious life means nothing if you can’t manage your money well.
3. Have more than one checking and saving accounts
You want to have more than one checking and savings account for different things you need to save for. For example, your emergency savings should RARELY be touched. It should not be something you withdraw from when you don’t have any extra money in your checking for a cup of coffee. Use another savings account for daily expenses.
The types of accounts you might want to get:
- Regular checking with debit card and savings account for daily expenses
- Another checking account with a debit card just in case there is an issue with the other card
- High-yield savings account for emergencies
- Savings account for taxes
- Savings account if you have children
- Savings for large purchases like a car, travel, or a downpayment on a house
4. Put all your subscriptions on a card that does not overdraft
Just in case you forget a subscription, put it on a card that automatically declines when you don’t have enough money. Many national banks charge you overdrafts if you go over what is in your bank account. So it would be best to have a checking account that does not have that overdraft feature.
One of the financial goals you should master is learning how to prevent overdraft fees. According to CNBC, the average American pays $250 in overdraft fees per year.
Budgeting
5. Pay yourself first
Often we pay off all our bills and then our debt, but don’t have any money left over for savings and investing. Pick an amount and pay yourself first to put into your savings. This will help to build extra cushion just in case you have an unexpected expense.
You can automate this if you are not good at taking money out for yourself before you pay your bills. If it’s difficult to pay yourself first, then start looking for a better job, ask for a pay raise and/or start a side hustle.
6. Stop impulse shopping and stick to your budget
When you impulse shop, you ruin your budget and the more you do it, the more you could put yourself in major debt. When you go grocery shopping, make sure to bring a list so you get exactly what you need and nothing else. Eat before you go too because we often collect sugary and fatty foods when we’re hungry.
Avoid shopping at overpriced stores outside your budget. It’s okay to buy refurbished or used products to save some money. You can also try paying for most of your things in cash to directly see how much you are spending each week. Give yourself a limited amount of cash to spend on your needs and a few of your wants.
7. Budget your money according to a percentage you set
Budget your money for areas that realistically work for you. The standard recommended is the 50/30/20 budgeting rule. This is where half of your money will go towards what keeps you alive and living comfortably, all of your basic needs such as rent and groceries. The next category is what you want at 30% which includes things beyond what you need that make you feel happier.
Wants is something you can live without, but it’s not recommended to be too strict with your budget and have a little fun every now and then. The wants category is the most dangerous though because some overspend in this category with impulse shopping. The final category is savings at 20% and this is the pay yourself first method.
Balancing your budget percentages is one of the financial goals you should master.
8. Track where your money is going and review monthly
Especially track those recurring subscriptions because you might forget them and then you’re hit with an $80 yearly subscription the following year. Unexpected expenses could mess up your budget. Track all of your expenses, including your subscriptions.
You might also find that you’re spending too much in one category and should cut back to save money. For example, I love food and would spend hundreds purchasing meals from restaurants for my family and me. I didn’t realize how much I was spending until I started tracking my purchases and felt so embarrassed.
9. Stop purchasing or unsubscribe from things you are not using
A lot of us have subscriptions that we rarely even use. Try to cut back on what you use and live more intentionally. Use only what is necessary and some of the things that you want. If it’s in a want category, make sure you actually use it. You could be saving hundreds of dollars per year by cutting out unnecessary subscriptions.
Retirement
10. Save at least 10% of your income for retirement in an IRA, 401K, or 403b.
According to a Gallup Poll, only 26% of young people began saving for retirement before age 25 while the average first year of saving for retirement was 29 years old. The earlier you start saving, the more money you could have by the time you retire.
If it’s possible, try to increase how much you put into retirement higher than 10%. There’s so many costs you have to cover when you get older. If you live in the U.S., you know healthcare is super expensive and will take up a huge chunk of your savings when you are elderly.
Choose what age you would like to retire, then calculate potential expenses to see how much money you would need, and then do the math to see how much you would need to save each month. It’s better to start saving earlier with less money than later with a lot of money.
Credit Cards & Debt
11. Understand what factors impact your credit score.
When I was in college, I quickly signed up for a credit card just to get a major discount on some technology that I needed. That was the worst financial decision I ever made. I didn’t read the fine print and was not capable of managing credit cards because I knew nothing about credit scores.
Before you get any credit card or loan, always study all the factors that go into your credit score. It will save you a lot of headaches down the road and is one of the credit financial goals you should master asap. Having a good credit score is important when job searching as employers might look it up. Also, it helps when you are apartment searching and getting loans.
Things that can have major impacts on your credit:
- Whether payments were made on time
- How long you have had credit accounts open
- Number of credit inquiries
- Diversity of the types of credit
- How much debt you have compared to your limit
12. Carry no credit card debt. Pay it off at the end of each month.
You might think that paying the minimum you owe on credit cards is good, but unfortunately it is not. You’re supposed to pay the full balance you owe before the deadline. Carrying 30% or more on your credit card utilization looks bad too.
Also, if you miss the minimum payment consistently, they can close your account and send it to collections which is one of the worst things that can happen. That will stay on your credit report for a whole 7 years! It does not look good to people you want to get a loan from.
If you can’t pay for your credit cards in full, do not get them. Many older adults have this regret and it put them far behind financially.
13. Pay more than the minimum on your student loans
Pay off your debt faster by paying more than the minimum. If you pay the minimum, it could take decades to pay off if you owe a lot. The interest adds up and you start paying extra. The faster you pay it off, the less interest you will have to pay.
14. Start automating your finances to pay down debt and save
If you are not consistent with paying down debt and saving, then you should consider automating paying it off and saving. This really helped me to pay down a lot of my debt and save for emergencies. I used to set my credit cards to be paid off every month and used the Digit app to save money for emergencies and travel plans.
15. Check your credit report multiple times a year
There are three different credit report agencies ( TransUnion, Equifax, and Experian) and you can only download a free report from each once a year. So space downloading one each every few months and check if everything is reported accurately. If something is wrong and it’s major, your credit score can dip pretty low.
You want to make sure everything is correct because it could prevent you from buying a house or getting a loan for a car in the future.
Insurance
16. Get life insurance to save your family money
I learned just how important life insurance is after some family members passed away and how expensive funerals are. When you get life insurance, you help to decrease the amount your family has to pay after you pass. It’s weird to think of this stuff, but it’s super important to not put others at a financial disadvantage too.
Imagine your partner or kids having to pay thousands of dollars and them not being able to. Protect your family by getting life insurance.
17. Write a will that includes where you want all your assets to go
Another way to protect your family is by designating where you want everything you own to go after you pass. A lot of families fight over money leftover by a loved one and it’s difficult for the courts to divide it. It might not even get into the right hands.
If you write a will, you can include what goes to who and what percentages. It doesn’t even take that much money to write a will.
18. Sign up for disability insurance
If you get injured and are not able to work for a while, you’ll be at a financial disadvantage because that means months of lost income. With disability insurance, you’ll still be able to get paid a portion of the income you usually make during those times you are unable to work.
Imagine getting injured and having your income suddenly halted. Sign up for disability insurance to prevent this.
19. Know how your health insurance works to determine expenses
There are a lot of costs you have to pay when it comes to health insurance. Have a list of what you have to pay for each thing. How much do prescriptions cost, how much it costs to stay overnight, etc. Knowing these things could help you to quickly cancel something if you cannot afford it. Some people rack up thousands of dollars by staying in hospitals for days.
It’s sad that U.S. citizens have to do this, but it’s pretty common. This of the top super important financial goals you should master.
Income
20. Diversify your income and have multiple streams of income
Start a side hustle or two. Become an entrepreneur if you want. Start investing in an account and collect dividends. The key here is learning how to generate passive income. Passive income is what sets apart the wealthy from the poor.
If you have passive income, that means you can sleep while you are earning money. Passive income can come through things like investing, earning money from an eBook you published, affiliate marketing, etc.
The more income streams you have, the easier it is to navigate a difficult financial period in your life.
21. Negotiate your salary and benefits before EVERY job you accept
In 2019, it was estimated that white women earned 82 cents for every dollar men made, while women of color made significantly less. Black women made 62 cents and Hispanic women made 54 cents for every dollar men made.
Know your financial worth and don’t underestimate your skills and experience. Having a low salary can put you at a major disadvantage when it comes to your finances. It will take you a long time to catch up because even if you get a raise, it will only be most likely a small percentage.
Especially for women, this is one of the financial goals you should master is knowing how to negotiate your salary with confidence. This is one of the reasons women are paid lower is because they are afraid of asking for more and sometimes even discouraged by their employer for doing so.
Related Article:
Strategies to Become a Competitive Job Applicant
Goal Setting
22. Set short and long-term financial goals
Have goals for the next few months and years. If you are moving, set financial goals for that. If you plan on having a kid soon, start saving for that. You want to see how your life is going to change in the future and create goals around your life milestones.
Calculate your net worth and make goals to increase it each year. You can increase your net worth by paying off more of your debt, increasing your savings, and investing.
Some questions to answer:
- When do you want to buy a home?
- What major financial challenges are you having?
- How much do you need to save?
23. Meet with a Financial Advisor
If you have your goals set and are unsure if you have the right plan, you can always meet with a financial advisor to help you find ways to quickly pay off your debt or invest more money. They can look at your financial situation and use their expertise to recommend you the best strategy and products.
You’ll want to shop around for a financial advisor though. They’re not always looking out for your best interest and some might get paid extra commission just for recommending you things even if they aren’t right for you.
Taxes
24. Know how to do your own taxes
When you become more advanced in doing your own taxes, you can find out how much you could actually save. Not all tax specialists have your best interests in mind. Figure out how to do your taxes and save a couple hundred a year doing your own.
Why waste money to have someone else do it when you can enroll in an affordable course and learn it yourself? The more you learn how to do things on your own, the more money you save. It doesn’t make sense why schools do not teach us this and set us up for failure. This is one of the financial goals you should master by age 18.
Things that can help reduce your taxes:
- Charitable donations
- IRA / 403b / 401(k) Contributions
- 529 Plan Contributions
- Earned Income Tax Credit (EITC)
- Health Savings Account (HSA) Contributions
- Business Expenses (if you’re self-employed)
25. Give back through charity and share the wealth
Once you have all your basics needs met, you paid yourself first, and you have your debt under control, you can start giving to different charities. It’s always great to give back and help your community. You can also claim this on taxes.
Life Advice
26. Don’t fall for scams and get rich quick schemes
Always do your research before making any financial decision, especially ones that seem too good to be true. There is no method to become rich quickly unless someone wealthy just gives you their money. Wealth takes a while to build.
There’s a lot of people out there that are in debt because they signed a contract without doing their research first. Don’t be that person.
27. Reuse products and don’t buy everything new
Learning the art of sustainable living will help you to save so much more money. You don’t need to buy everything new and can get used products. Shop at thrift stores, find new ways to reuse your old products, learn DIY, and grow your own fruits and vegetables.
Try to stop buying so much plastic and reuse your water bottles and shopping bags. The small things really add up in costs. You’ll also help the environment. This is one of the more advanced financial goals you should master.
28. Cook more meals at home to save money and be healthier
The standard of living is getting more expensive every year. Try to cook more of your meals at home. You’ll save more money and will be healthier in the long-run. You can even try growing your own fruits and vegetables, making your own food from scratch, and stocking up on the basic essentials.
Investing
29. Learn how to do basic investing and increase your financial knowledge
A good way to get started with investing is signing up for a mobile app that helps you to invest like Robinhood or Acorns. I’m using Acorns until I know how to invest on my own and have more income to invest. You can also go to your local library and look for some books to learn how to invest.
Money in your savings accounts just sits there and does not grow. But if you learn how to properly invest, you can potentially make a whole lot more money.
30. Have a diverse investing portfolio
When you invest all into one stock and that company loses a lot of money, you could potentially lose almost all of your money. That’s why it’s recommended to have a diverse portfolio and mix up the kinds of things you invest in like stocks, bonds, etc.
Certain investments are more stable than others, so you won’t lose as much quickly.
Those are some of the financial goals you should master.
Which financial steps do you need to work on?
