10 Financial Milestones To Hit By Your 30th Birthday
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. 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. 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. 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 care for younger siblings), you should aim to be financially independent of them.
This means 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.
It doesn’t take a lot to quickly start an emergency fund. All you need is consistency to build up that financial buffer.
By the time you’re 30, you should have looked beyond savings accounts and diversified your funds. It could be something as simple as unit investment trust funds, or as complicated as playing the stock market.
You can open UITFs for as low as ₱20,000, which we’ve covered before. Investing will generally yield higher returns than regular savings accounts. This is to ensure that your hard-earned money is better protected from the effects of inflation.
Start saving for retirement
It’s never too early to plan for retirement. You can try to deposit even a small amount in your retirement fund from the time you’re 25.
Deposit small sums regularly to 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. This is even more important 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 are protected.
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. If you have more concerns, you can consult a lawyer.
Sign up for 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 financial plan
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. 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.
If you work hard and achieve most of these in your 20s, you can be ready for the challenges of your 30s, 40s, and beyond!