8 Financial Goals to Hit Before Turning 30
Our 20s can be such a wonderful time to learn about ourselves, bond with friends, and earn our first “real” paychecks. That said, our 20s do not come and go without their fair set of challenges. If you’re like most 20-somethings, you have plenty of mistakes under your belt—financial and otherwise.
And though it may not always seem so, that’s a good thing. Luckily, mistakes and missteps are often followed by learning and expansion.
Early in adulthood, trial and error is usually the name of the game when putting together a financial education. And while that’s great as an introduction to learning about money, there comes a time when everyone must be proactive with their money. Your mid to late 20s might be a great time for this.
While it is possible to create some guidelines on what to achieve by 30, keep in mind that everyone’s goals are going to be a little bit different because everyone’s personal financial situation is different.
For example, someone who has student loans will likely have financial goals that are different from someone who doesn’t. Therefore, you could pull from this list what makes sense for you, and amend as needed. (And none of this should be considered financial advice.)
Here are eight financial goals you might reach for before you turn 30.
1. Building an Emergency Fund
What happens if you get laid off from your job or incur an unexpected medical expense? Ideally, you’re able to pull from a well-stocked emergency fund instead of putting expenses on a credit card, which could charge loads of interest.
An emergency fund may simply be a savings account holding cash, only to be used in the event of an emergency. You could keep this cash in an account that is easily accessible and pays interest, like SoFi Checking and Savings® checking and savings account.
An emergency fund typically has three to six months’ worth of living expenses, though exactly how much exactly depends on personal factors, like whether or not a person has a family or how difficult it would be to find a new job. If saving three or six months’ worth of expenses sounds overwhelming, you could start with a smaller goal of perhaps $1,000.
2. Paying Off Credit Card and High-Interest Debt
Best practices for helping to build good credit include making on-time payments and using a limited amount (30% or less) of your available credit.
This is called credit utilization. For many people, making on-time, in-full payments on their credit cards is a sound strategy for attempting to reduce overall utilization and boost a credit score.
Also, making on-time and in-full payments can save you money. If you currently have a balance on a credit card, you’re likely being charged a pretty penny for the service. Frankly, it can get expensive to carry a credit card balance. One financial goal might be to pay down the balance before you turn 30 years old.
Same goes with other high-interest debts, such as personal loans and high-interest student loans. A great financial milestone to hit for your 30s is to start building wealth, but this can also be difficult to do when you’re making substantial payments toward interest on debt.
To get started, you could list all of your debts out on a piece of paper or in a spreadsheet. Then you might pick one to work hard on—perhaps the one that has the highest rate of interest or, for more of a psychological victory, one that you could get rid of fast. (The former methodology is called the avalanche method, and the latter is the snowball method.) You could do this while making minimum monthly payments on all your debt, of course.
Another tactic you could consider is consolidating your high-interest debt, like credit cards, using a personal loan with a better interest rate. This won’t cut to the root of the problem (why there’s high-interest debt in the first place), but a lower interest rate may allow you to make headway on paying back your debts faster.
3. Starting Saving for Retirement
You might be surprised to see saving for retirement in an article with tips for turning 30, but your eyes do not deceive you. In a perfect world, everyone would start saving for retirement as young as possible. Even though retirement feels like ages away, it might include some of the highest expenses of your life.
How much you “should have” saved by 30 is a popular but difficult question to answer, because everyone is starting in such a different financial spot. One popular opinion is that someone should have the equivalent of their annual salary in retirement savings by the time they are 30. If you don’t have this, don’t worry—you could simply aim to get started as soon as you can, ideally before you turn 30.
To begin saving for retirement, the first step could be to determine what type of retirement account you want. Does your employer have a 401(k) or other workplace retirement account you can utilize? This might be an appealing choice, especially if your company has a match program. If you are a freelancer or contractor, a Roth IRA or SEP IRA might be a good option.
4. Having a Plan for Your Student Loans
If you do have student loans, you probably want to feel confident in your plan to repay the loans. This means using the best repayment plan or method for you.
For example, this could mean making sure you’re on the correct federal repayment plan, such as an income-driven plan. This could apply to you if you have financial need or are working toward student loan forgiveness using the Public Service Loan Forgiveness program.
For others, staying on the standard, 10-year repayment plan for their federal loans is the best course of action for them.
Others may consider refinancing their student loans to a lower rate, especially if they aren’t planning on using any of the federal loan programs or protections (that’s because you forfeit your access to these federal programs if you refinance your federal student loans with a private lender).
Refinancing might be an attractive option for those who want to save on interest on their loans, or who want to expedite their loan repayment schedule.
5. Finding a Budgeting Method That Works for You
Budgeting might feel tedious and hard to master. But once you get the hang of it, a budget could be empowering and even freeing. Budgeting can allow you the freedom to spend within limits. It may bring you some piece of mind looking at your budget as you have money set aside for every purpose.
By age 30, it might be good to have mastered some sort of budgeting style that works for you. If you’re new to budgeting, you could try using one of the budgeting templates on Excel, building your own budget using good ol’ pen and paper, or using a budgeting app.
Before building an official budget, you could spend a few months tracking your spending so you get a good idea of how much you’re spending in each category. You might want to avoid building a budget using guesses—that’s a surefire way to set up your budget for failure, which could discourage you from keeping at it.
6. Learning Investing Basics
Saving in a retirement account is only the first step. The second step might be to invest more of your money. With index funds, retirement-target date funds, and technology-based advisors like SoFi Invest, opening an investing account is easier and more accessible than ever before.
Even more important is feeling confident in your investing plan, which could be a solid addition to your financial goals by age 30. Become comfortable with the way the different asset classes work (stocks, bonds, etc.) and know how to protect yourself when certain asset classes are down. (Hint: The right reaction is usually to do nothing.)
To learn about investing, read articles and books and listen to podcasts about investing. The terminology might seem foreign at first, but as with anything, learning becomes easier with more familiarity.
7. Asking for a Raise
When it comes to saving money creatively, there are limits to cutting coupons and cutting out lattes. You might also want to know how to ask for the compensation you deserve. A great financial goal by age 30 could be to ask for a raise.
Your workplace might not always bump your pay up in lockstep with your skills and value to your company, or with what is competitive in your industry. Often, employees have to ask.
Even if your first attempt isn’t successful, get into the mindset that a compensation conversation will happen every year and that sometimes, that conversation might be initiated by you.
8. Getting Your Credit Score Where You Want It
Your credit score affects many areas of your life. It can determine the rate at which you can borrow money, whether through a loan or a rate on a credit card. Credit scores may be used for reasons that seem completely unrelated to credit, such as qualifying for and renting an apartment.
The first step to getting your credit score in shape might be to gain familiarity with your credit history. You can get a copy of your credit history and score at the Annual Credit Report website. First, you could review your credit history to make sure that there aren’t any mistakes, such as late payments or other delinquencies.
Next, you could make a plan of action to improve your credit over the next six months. An improved credit score won’t happen right away, so you might want to remain patient with the process.
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SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.