The Before you Turn 30 Financial Goals Checklist
Financial Goals for your Twenties
Before you hit the big three-oh (30 for those keeping score), there’s a few things you should start seriously thinking about in order to get your financial house in order. Consider this as a check list of goals to strive for in order to set yourself up for future financial success. It’s kind of like the ‘bucket list’ – only much more boring. But who said boring wasn’t good when it comes to personal finances? I’ve spiced up this list by ways that you can earn ‘bonus points’ by taking these goals to the next level.
1. Start an IRA
Roth or Traditional, it doesn’t matter. The key is to start one and get in the habit of contributing to it. Look for a no-fee IRA through a discount broker. houses both my traditional and my Roth IRA. I love the fact that they have zero fees on their IRA and trades are only $4.95. It will literally take you 10 minutes to create the IRA, the hard part is being disciplined enough to fund it.
- Bonus points: Start both and contribute a combined $5,000 max annually.
2. Start an Emergency Fund
This recession has many takeaways, some of which (i.e. trading strategies, cash positions, etc.) are easily debated. One lesson learned that is almost impossible to argue against is the merits of creating an emergency savings fund. I’d recommend at least 6 months of living expenses, especially after having seen my wife get laid off and go three months without finding steady work – you never know how long it will take you to recover.
- Bonus points: Save a year’s worth of living expenses.
3. Get your Employer’s 401K Match
Whether your employer matches 5% or 50% of your 401K contributions, don’t turn down any of this free cash if you can afford it.
- Bonus points: If you can contribute the IRS Max 401K Contribution by the age of 30, you get extreme bonus points.
4. Eliminate all Bad Debt
That’s right, get all those credit cards, auto, and other high interest loans paid off. If you have a mortgage or student loan debt, you probably have better ways to direct your excess cash flow, so don’t stress if your interest rates are low.
- Bonus points: Pay off all high interest (4% and up) student loan debt.
5. Create a Monthly Budget Plan
Take an afternoon and sit down to create a monthly budget of all income sources and expenses. This is an essential move for EVERYONE. Want a template to start, check out this free budget planning worksheet.
- Bonus points: Cut your expenses (and maximize income) enough to be in the black every single month.
6. Set Some Serious Short and Long-Term Career Goals
Create a 2, 5, and 10 year plan to put yourself on the right track in your career. I’ve seen so many family members and friends waste away in their twenties to the point that if I were a prospective employer I would have serious reservations about what they did in all the years between high school and their job application. Do something that puts you closer to your long-term goal AT ALL TIMES. Don’t waste away a month, before you know it, it will be a year gone by. Waste away a year, and soon it will be five.
- Bonus points: Settle into your long-term career (not just your job).
Financial Goals Discussion:
- What would you add to or subtract from this list?
- In your opinion, what is the most important thing to accomplish financially by the age of 30?
- How many of the 6 checks have you completed already?
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If I had to choose one of these as being the most important it is the get out of debt one. A close second would be monthly budget. And all the others are just icing on the cake.
I’d rank the setting goals item as a priority. If you don’t have an idea of what you want to do with your life, what does it matter if you’re debt-free or if you have a 401K? (Aside from the obvious that debt is bad and savings are good).
Life goals are important — and their importance is unfortunately often under-estimated. Some of my life goals may not materialize, but its better to dream than to wander aimlessly through life with no purpose!
Great post! I was just contemplating over the weekend the things I need to do before I hit the big 30…most of those listed I have already, hopefully that means I am on the right track, however I still have many other financial goals I want to hit also.
That’s a good list. It’s very important for the before 30 group to remain flexible with their financial situation. This would include, first and foremost, establishing and following a budget. A budget will help you to establish a discipline of living within your means and should help you to carve out some money for debt payments, retirement savings and emergency savings. If you focus all your resources on getting out of debt first, you might miss out on one of the greatest assets young people have – compounding interest! And in the current economic environment, if your not investing anything, you could be missing out on a once in a lifetime opportunity.
@ Betsy – yes, when it comes to looking beyond your finances and taking quality of life and happiness into consideration, setting life goals is definitely a top priority in comparison to the others on this list.
@ Aman – what have you checked off, and what’s still on your ‘to do’ list?
@ Chad – agreed, it definitely is a list that takes the proper balance. You don’t want to pull all your efforts into one and forget about the others.
Great list! I’ve got four- my employee does not offer a match and I only have a couple of thousand in my e fund. But I just turned 24 last week so I have plenty of time.
Hi
I think financially the most important thing is to have your budget worked out. If you don’t have this then you don’t know whether you can afford to contribute to your pension or not.
The thing I would add to the list is a personal balance sheet to keep track of assets and debts.
thanks
Neil
I feel very fortunate that in the past 2 years I have made strides toward all of those goals, I think sometimes I get so caught up in thinking about and talking about money that I forget how much progress I have made already! Two years ago I had opened a Roth IRA and was contributing $50 per month, and that was the extent of my progress toward any of these goals. This is an excellent post for putting me into a better frame of reference.
Also, I think I tend to under-estimate myself. I feel like number 6 is the goal I need to work on the most, as I’ve never been good at long-term goals. However, even though my goals aren’t clear, I really haven’t been wasting time, and I should probably give myself more credit for that. I’ve applied to graduate school (Economics) for next year, and have been taking extra undergrad courses (I already have a degree in a completely unrelated subject) to better prepare myself for grad school. I also have learned an immense amount about personal finance, and have started teaching some basic personal finance classes (mainly to people who are low- or fixed-income) at a local nonprofit. Thanks for making me feel better about where I am right now, I tend to focus too much on the “where I should be” and things I’ve messed up or could be doing better! (:
These are all great goals….I would say the budget and emergency fund are the most important. These 2 are foundational to financial success. Great post!
Check! Check! Check! Check! Check! Check!
Nice,6/6 done! And I am still a few months short of 25!
Well 5 years is a long time though. MIGHT enter into some car loan again before I turn 30, but not if everything goes as planned and I do not hit any emergencies or anything like that. *knock wood*
Just had a talk with my manager yesterday (I started working a year ago), and had a little informal performance review. He had some rave reviews too! So that puts me on my way to a major short term goal of getting a title promotion in a year – which he said I well almost certainly get next year.
So the only thing remaining is Someone Special(tm) to Share The Success(tm) with. Not doing too well on that one so far though, I am afraid.
These are really good ideas and will save you in the long run…
To this list I’d add the idea of creating financial goals and bahaviorial patterns for the decade of your 30’s… sure life will have its share of curves but that’s no excuse for not having a plan…
I’d formalize a budget if you haven’t already… it’s really the only way to win. Plan to avoid new car purchases through this decade, used cars will do nicely thankyou. Plan to payoff ALL debt in this decade… think about it, your 40 with NO debt and money in the bank. Smirk now, but trust me… trust me. You’ll want this!!
I’m sure there are dozens of other ideas in my head… but this will do for now.
Thanks for sharing and spurring the thought process.
Dave
Hi all. Great list. I think getting out of debt is the most important one to check off first. Then the next step is get invested in those IRAs/401Ks. With each of those time is the biggest factor in any gains with those accounts. And a few years can make a huge difference down the line. And, if your employer matches 401K contributions and your not contributing, you are just saying no to free money basically!
Thats a good list. I would put number 5 – creating a monthly budget plan as the most important point because all the others will depend on the budget. It is a good habit to write up a budget and in the book ‘Millionaire Next Door’ (review at my blog) the authors noted the high percentage of millionaires who use a budget.
@G.E. – I’ve tried to come up with something, but I can’t think of anything to add to your list. Your readers will do well if they heed your advice.
Unfortunately, I turned 30-years-old one year ago.
Fortunately, everything on your list was already checked off.
@Neil – I agree about the budget, and especially in regard to a personal balance sheet.
About two years ago, after getting slapped with an unexpectedly high heating bill, my wife and I resolved to run our household like a Fortune 500 company. We generate a quarterly balance sheet, income statement, and statement of cash flows.
This not only provides us with a solid overview of where we stand and what we need or want to improve on. But as Stephanie points out, it allows you to take an invaluable glimpse of where you’ve been, where you are, and where you’re headed financially.
It’s invigorating to look at your personal balance sheet and see an increase from quarter to quarter, and year-over-year. It also gives you extra motivation to stay disciplined so you can meet your goal for the upcoming quarter and stay on track with your financial plan.
Great list, although I disagree about the difference between Roth and Traditional IRAs not mattering. For a young person, you are almost always better off to go with a Roth because you will not be taxed on the growth of your money. When you have a long time to invest, you will see a lot of growth (especially if you jump in now when the market is low).
What would you recommend to those of us who are still in school? I’m 23, and in an unfunded graduate program. I try to take care of my finances, have no debt other than student loans and a tiny little IRA saved over from the year I worked between degrees, but are there other steps I can be taking?
I’m a pretty young guy, but it seems like the time is going by so fast. This article is a good reminder of that. I wonder how much I should have saved by age 30.
What about before you turn 40?!?!?!
@MMStein: Thats crazy talk. I’d rather have two lives of 35 each rather than one of 70.
As a medicine resident, I’m turning 28 this year and have $150K in med school debt all at >4% interest. I make about $10 an hour (given that I work 80 hours a week). No way I am going to pay that off before I’m 30!
When I turned thirty I haven’t written myself a check list of my financial goals, lucky for me I read this post and started considering in making myself one.
I am turning 30 next week but a week before that, i went through my goals list and found out that I did accomplish what I set out to do before turning 30.
Oh my this is so cool! Thank you for posting! i’ll definitely re-tweet this!! Thank you so much!
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