Going from your young, vibrant 20s to your more mature 30s is a huge transition. You’ll say your final goodbyes to “young, wild, and free” and move into greater responsibility. Taking charge of your personal finances is one of the biggest responsibilities you can assume, and this is what you should have achieved by age 30.
1. You should have a great (780+) credit score.
During your 20s, you should’ve been raising your credit score. By age 30, you have had plenty of time to build your credit history, pay off your balances in full every month, and keep your debt utilization ratio low.
Check out: Improve Your Credit Score, Improve Your Life and Want Killer Credit? Here are 5 Rules You Must Follow
2. You should be budgeting for large expenditures.
In your thirties? It’s time for a house, a dog, wedding bells, children, and other big expenses. Ideally, you should be adjusting your lifestyle to make sure you can afford all this. Setting a budget and sticking to it will ensure that you don’t go into debt for these things. According to the U.S. Department of Agriculture, it will take over $240,000 for a middle-income couple to raise a child for 18 years. You better get started!
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3. You should have an emergency fund.
This should’ve been one of the very first things you set up when you ventured out on your own, but don’t feel bad if you don’t have one yet. Most Americans don’t. You should have at least six months of living expenses, although you might want even more to buffer for medical emergencies or unemployment.
4. You should be automating your savings.
This makes saving money painless. You won’t even be tempted to spend the fruits of your labor. One of the greatest secrets of wealth-building is “pay yourself first”. When you have 10% or more of your paycheck deducted right off the top, it guarantees that you get paid first. You won’t miss the money, and you’ll be pleasantly surprised one day when you wake up and see the nice chunk of change you’ve accumulated.
5. You should be staying in your own financial lane.
Don’t worry about what everyone else is doing – focus on yourself. Your neighbor just got a brand new Benz? Cool, he’s probably in massive debt. Your coworker has a bigger house than you? What about that mortgage payment though? Keeping up with the Joneses in financial suicide. If you’d rather have a big house and a flashy car, this doesn’t apply to you, but I’d rather have the cash.
6. You should be paying off high-interest debt.
In a perfect world, you wouldn’t have any debt. But if you’re like most young adults, you’ve got a car payment, student loan, credit card debt, and possibly a mortgage. You should focus on paying off your highest-interest debt first. Once you get that paid off, take the money you were paying and put it towards your next biggest debt. As you keep paying, your debt payoff will be accelerated.
Check out: The Grim Reality of Student Loan Debt
7. You should be contributing to a Roth and Traditional IRA.
It will take you ten minutes or less to open an IRA account online, so do it. Once you get it set up, keep funding it (preferably through automated payments). Because there’s a limit to how much you can contribute, it’s imperative that you get started early. The reason you should have both a Roth and Traditional IRA is so you can split the tax benefits between the present and your retirement.
Check out: Traditional IRA vs. Roth? Here Are The Differences You Need To Know.