In order to compile a specific list of financial goals everyone should have reached by 30, I reached out to Jane Hwangbo, a former investment analyst and portfolio manager who founded the site Get Your Money Brain On. She also started Money School with Jane, a personal coaching program designed to change the way individuals see and interact with money. Before we launch directly into money goals, I wanted to gather some background on our expert’s relationship to money when she was approaching her 30th birthday. Jane says that even though she was in a very good place financially, she didn’t have a clear financial direction when she kicked off her third decade.
She says, “I was a successful Wall Street research analyst in the area of technology, and one of the few females to move markets in my field. So, my earnings were strong, but I was a mess in terms of understanding why money was important to me and how it would make me happy. I blew a lot of my earnings on meaningless purchases to fill an emotional void. Needless to say, it didn’t work. I was a mess with strong finances. I didn’t understand that my financial goals and my life goals were not aligned.”
It goes without saying that Jane spent a lot of time learning to put her strong finances to the best possible use. We worked together to compile the following list of realistic and basic financial goals everyone should have reached by 30. Jane firmly believes that there is no right or wrong place to be by 30 (or any age for that matter), but also stresses the importance of following helpful guidelines in order to help shape your financial future, which is why it’s good to keep these 10 goals in mind:
1. You should have an emergency fund with six months of expenses.
Jane reminds us that “this fund is not for vacations or birthday gifts you forgot to budget for. This fund is your save-your-butt account in case you lose your job, get hurt in an accident and can’t work, etc. It’s your survival fund. It should be at least six months of fixed living expenses, including rent, utilities, student debt payments, groceries, phone bills, etc. If you’re having trouble starting an emergency fund, consider automatically transferring money into savings with free apps like Acorns or Digit.”
2. You should feel comfortable about what you’re making at your job, or have a clear idea of how to negotiate to move your career and earnings upward.
Jane points out, “Many millennials came into the workforce during a very stressful time: the 2008 recession. If you haven’t re-evaluated your salary goals in a while or had a serious conversation with your boss about your professional path and future at your company, it’s probably time.”
3. You should be contributing to a retirement fund consistently.
If you have a 401k where your employer matches, Jane advises that you try to max out what you’re allowed to put in so that you’re getting the most “free money” possible. However, if your employer doesn’t match, whether or not you choose to contribute the full amount is more circumstantial.
4. If you’re married or in a serious relationship, you and your partner should have an open and honest relationship with money.
Jane emphasizes that “money is one of the most stressful points of conflict in a relationship and it’s one of the reasons that couples can experience serious communication issues. Get used to being honest from the beginning.”
5. Know your credit score.
According to Jane, if your credit score is in the 700s, it won’t get in the way of your other financial goals, such as buying a house or getting a good rate on a car loan. She also says if you’re in the 800s, you deserve a gold medal.
6. You need to have a handle on your investments and understand why they are good investments.
The goal is that by the time you’re approaching your 30s, you not only have investments in your portfolio, but you understand the purpose of those investments. Jane adds, “bad news, though: if you’re already invested in a major asset and don’t know why, you went about it backwards. Catch up.”
7. Pay off your credit card debt.
Jane: “Credit card debt is almost universally the first debt you should tackle. The reason? This kind of debt carries one of the highest interest rates around. Once you get over your head in credit card debt, it gets very difficult to make progress in paying it down because the average compounding interest rate is 18%+. It can end up spiraling, which is why paying it down should be a huge priority.”
8. You should understand the basics of personal finance and the financial jargon that comes with it.
Jane says, “Personal finance is not just about coupon-clipping or saving a few pennies here and there. It’s much more comprehensive and bigger than that. If you haven’t already, take the time to learn about how finance applies to your money coming in (your earnings), your money going out (paying for what you need and want), and how to make your money work for you in the future (investments and debt). Know what basic terms mean, like ‘balance’ vs. ‘principal’ and ‘assets’ vs. ‘liabilities.’ They’re important to making decisions about your financial future.”
9. Make good, concrete financial habits and stick to them.
According to Jane, “Creating strong financial muscles is tough but necessary, just like beginning to workout and eat healthy is a challenge. You have to work on it. Start small by automatically saving — you can even use the free apps I mentioned. Next, whatever debt you have, whether it’s student or credit card debt, I personally believe you should try to get used to paying down more than you have to, even if it’s just a few dollars more to start. This can all help strengthen your emotional maturity when it comes to your finances.”
10. You need to actually believe in your financial goals instead of trying to measure up to someone else’s.
When I asked Jane about the biggest thing getting in the way of millennials accomplishing their financial goals by a certain age, I expected her to point to high student loan payments and low-paying jobs. Instead, she said that one of the biggest things getting in the way of young people reaching their financial goals is “fear that they are not enough; the concern that they should be richer in dollar terms, and that they are not following the recommended path to certain success. Measuring their financial status against these illusory standards causes young people to make the wrong financial decisions for themselves. Perhaps they buy a house when they’re not financially ready because their most ‘successful’ friends are doing so. They pressure their fiancé to buy an engagement ring that wipes out a decade of savings for their future. They blow their precious financial assets to keep up with the couple next door. Keeping up with other people is never a great financial plan.”
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