Getting off on the right financial foot before your 30s can pave the way to greater financial wealth later in life. Instead of making positive inroads to financial independence, many young adults create negative financial situations that can take many years to resolve. A few wise moves in your 20s can pay off down the road. Achieve the following goals before you turn 30!
1Define Your Financial Goals
Having properly-defined financial goals is an effective first step to reaching financial independence. A person's bank account may demonstrate whether or not they have set any financial goals. To start, you can set some long- and short-term money goals. Then, track your progress toward meeting them.
2Acquire All The Insurance You Need
In our 20s, many of us still live like we're in college. But it's important to be prepared for the worst. Protect your belongings, health, and income with insurance.
3Establish An Emergency Fund
Too many people live from paycheck to paycheck. An emergency fund will allow you to handle those inevitable financial bumps in the road. Whether it's the loss of a job or a blown transmission, you'll be able to handle it. The ultimate goal is to accumulate six months of living expenses, but even a few thousand dollars is helpful.
A simple savings account is an effective way to get started. Set aside a little from each paycheck. Soon, you'll eventually have a nice little nest egg.
4Max Out Your IRA
The contribution limits are $5,500 in 2015 for both Traditional and Roth IRAs. This might be a stretch when you're 22 years old. But you can pull it off if you make this goal a priority.
5Contribute Enough On Retirement Accounts
This is to receive full benefits on any employer-matched retirement accounts. For most businesses, that will mean a 401(k). Any matched contributions you receive are equivalent to free money.
6Create A Second Source Of Income
Find another source of income that provides at least $500 a month. It's a great cushion against any unforeseen expenses. It can also be useful for building your emergency fund or adding additional funds to your retirement account. Take note that there are plenty of freelance opportunities available online that can easily provide $500 or more per month and are flexible enough to accommodate any schedule.
7Become A Homeowner
It's debatable whether renting or buying a home is better in the long run. But having a place to call your own has many advantages. Most importantly, you'll build equity over time. Home ownership is a form of forced savings. Once you've settled in and expect to be in one place for a few years, give home ownership a careful consideration.
8Be Free Of Student Loans And Other Debts
Most student loan payback periods are 10 years. It can be even longer if you choose to consolidate. Try to be free of your student loan debt before your 30th birthday.
The same should go for your credit card debts. In the first place, avoid creating unnecessary debt. It's like running against a wind that won't stop blowing.
Accomplishing, as many of these goals as possible, will help to ensure that your middle age is free of financial struggles. A strong financial foundation created in your 20s can pay off for the rest of your life. Strive to achieve these goals and formulate your own. Planning and self-restraint are useful for your financial well-being.