10 Financial Milestones To Hit By Your 30th Birthday

September 8, 2014

Debt, General Money Saving, Health Insurance, Insurance, Investment, Money Management, Most Popular Articles, Savings Account

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Written by imoney

Being under 30 is great! You’re full of energy and potential to create a bright future for yourself. One way to harness that energy is by focusing on your own financial security. Below, we’ve marked out the 10 milestones you should achieve before you turn 30. But if you’re way off track on some of these, don’t worry; let the list serve as a guide to get you back on the road to a financially secure future.

Have a budget. We’re putting this at number one because it’s the simplest milestone to hit, and it will also help you achieve the rest of this list so much easier. A budget will give you a better picture of your financial health and from there you can figure out how much you can save towards your goals. If you don’t know how to make a budget, we’ve rounded up some apps to get you started.
Be financially independent. Here in the Philippines, twenty-somethings tend to live with their parents, even as they have their own jobs, and this is completely normal. But if your parents are capable of living without your assistance (e.g. they don’t have debilitating health problems, or they don’t need your help to rear your younger siblings in the case of single parents), you should aim to be financially independent of them. This means living on your own and supporting yourself financially, not relying on your parents to pay the bills. Establishing yourself in a career is a strong step towards financial independence.
Free yourself from debt. Some debts twenty-somethings have include credit card debts and auto loans. Many students also graduate college with loans to pay back. Aim to have paid off all your non-mortgage debts by the time you’re 30. Quick examples of how you can achieve this: come up with a method for paying off your debts, avoid taking on new debt, and save, save, save.
Have healthy emergency funds. If you don’t already have one, start one right now. If you have a small one, grow it to three months’ worth of living expenses. Have enough emergency funds stashed away in a savings account so you’re prepared for whatever financial issues come your way.
Investments. By the time you’re 30, you should have looked beyond savings accounts and diversified your funds, whether in something as simple as unit investment trust funds, or as complicated as playing the stock market. You can open UITFs for as low as P10,000, which we’ve covered before. Investing will generally yield higher returns than regular savings accounts, so your hard-earned money is better protected from the effects of inflation.
Retirement fund. It’s never too early to plan for retirement. If you can deposit even a small amount in your retirement fund from the time you’re 25, you can ensure that by 65 you have enough money to live comfortably and pursue the activities you want.
Write a will. This might sound a little morbid, but it’s important to plan for the worst, especially if there are people who depend on you. Write your will and provide for your loved ones, so that if you do become injured or incapacitated, they won’t go without. In the Philippines, we have two kinds of wills: notarial, which requires witnesses and a notary public, among many other legal requirements; and holographic, which is a simple handwritten will, dated and signed by the one making it. Any person over 18 can write a will without a lawyer, but if you have more concerns, you can consult one.
Insurance. By protecting your assets, you strengthen your financial security. You avoid going into debt when the unforeseeable happens to your car, or if you’re suddenly hospitalized. Get yourself health insurance, shop around for the best rates on car insurance, and start looking at life insurance plans.
Long-term savings. You may not be able to buy a home or pay for a wedding yet, but you can definitely start saving for them in your 20s. Expensive items like that need planning, so set up a savings schedule for them now, so you don’t go into debt when you have to finance these expenses in the future.
Positive, growing net worth. Ideally, your net worth (assets – liabilities) should be positive by the time you’re 30. Depending on your debt situation, this may be easier said than done. But if it’s truly impossible for your net worth to be positive, aim for your net worth to be increasing every year.