Turning 30 is a big milestone in life — and for many people in their late 20s, it serves as a sort of looming, unofficial deadline on when you should have your life together.
You don’t need to put quite that much pressure on yourself, as you’re never truly done growing, learning, or changing. But it might be worth having your financial life in order by the time you turn 30, since you could be about a decade into your career and entering your prime earning years.
So if nothing else, make sure you’ve hit these financial milestones before the big 3-0. Checking these boxes off your list can position you to most of your income potential and ability to grow wealth as you transition into your thirties.
1. Have a Fully Funded Emergency Account
It might have felt acceptable to lean on your family or even really close friends when you fell on hard times during your 20s. But asking mom and dad for some money to spot you in an emergency isn’t exactly the move you want to make in your 30s.
The easiest way to do this? Create an emergency savings account and fully fund it. Depending on your situation, you’ll want either 3 to 6 months’ worth of income in your fund, or up to 6 to 12 months’ worth of income.
The more unreliable your current income or the more financial responsibilities you have, the more you’ll want stashed in your emergency account so you can cover your own bills and living expenses should anything happen to your existing income.
2. Get the Right Insurance
On a similar note, you need to protect your assets. That includes your property if you own a car or a house and your own health — but car insurance and health insurance are likely policies you held in your 20s.
What you might have skipped over was life insurance and, even more importantly for most 20- and 30-somethings, disability insurance.
Getting these policies usually falls on the bottom of anyone’s financial to-do list, but make your 30th birthday your deadline for getting serious about protecting the valuable things in your life. The most valuable thing is your ability to earn an income.
That’s what disability insurance protects for you. Should something happen to you and leave you unable to work or perform a job to earn income, whether through illness or injury, your disability insurance could kick in and provide the money you need to pay your expenses and bills.
Life insurance doesn’t necessarily protect you since it only kicks in should you die — and quite frankly, no one needs cash if they’re no longer alive.
But anyone who depends on your current income could face financial hardship if you were to pass away. Life insurance protects those individuals (which are usually dependents like your children or someone you share debt with, like a spouse) and provides them with financial support.
That means the only people who need life insurance are usually those who have people in their lives, in some way, depend on their income.
Be careful when choosing an insurance policy. Salespeople who work for the insurance company may be incentivized to sell you more coverage than you actually need if they earn commissions on their sales.
To determine the right amount of insurance for you, make sure you hit the next on this list of financial milestones:
3. Talk to a Financial Planner
Nope, financial planners aren’t just for rich old people, although many traditional, old school advisors tend to operate that way and only focus on retirees. Thankfully, financial advice is changing and more and more professionals specialize in serving people in their 20s and 30s.
Make a point to at least schedule a consultation with one of these types of financial planners — one who understands the needs of someone early in their career with lots of time to build wealth throughout their upcoming 30s.
Getting a financial plan in place now can help you understand the right moves to make to maximize your opportunities to increase your net worth over the next decade. A good advisor can not only help you understand how much insurance you might need, but can suggest ways to:
- Pay down debt
- Reach big savings goals, like paying for a wedding or a home
- Start a business
- Fund your retirement
- Plan for financial freedom
…and a lot more. Again, look for an advisor who has experience working with people who are in a similar life stage. You want to know that advisor understands the specific challenges you face, and can give you advice tailored to your particular challenges and advantages.
4. Stop Overspending and Pay Off Your Credit Card Debt
You can only plead ignorance for so long. Stop ignoring your finances, track your spending, and use a budget to get your spending under control.
It’s time to live below your means, unless you want to spend your 30s feeling financially stressed and forever living paycheck to paycheck.
If you need to, switch to using cash only to make purchases so you eliminate the temptation of charging more to your credit card than you can actually afford to repay. Then, make a plan to pay off any existing credit card balances.
Credit card debt is way too expensive to keep paying for, and can stop you from achieving goals that are likely becoming more and more important to you as the next decade of your life looms.
5. Don’t Just Save. Invest.
If you haven’t started investing yet, you need to begin before you turn 30. This is one of the most important financial milestones to hit. Otherwise, you risk letting one big advantage slip away from you: time.
Investing is powerful because it lets you take advantage of compounding returns. That’s where you invest, earn a return, then keep that return on your investment invested — and it starts earning its own returns.
In other words, your money starts making money.
But to enjoy that benefit of investing, you have to stay invested for a long time — and that’s much, much easier to do if you start early. Fund your 401(k), open a Roth IRA, start contributing to a taxable brokerage… all of these are options for you to choose from.
The most important thing to know about investing financial milestones is that it’s more important to just start than it is to get it perfect right off the bat. You can always fine-tune your investments and get a real strategy once you get your money in the market.