You’re only in your 20s once, so squeeze every last drop out of them. This does not mean you should put your finances on the back burner. On the other hand, if you are already in your 30s there is no time like the present. Here are a few things you should think about doing before you reach your 30s.
1. Learn the magic of compounding interest. You can make up for a number of aspects in your financial planning except time. When it comes to compounding interest, time is the secret ingredient. Saving a small amount every year in a savings account has the potential to accumulate that much and more over time. The earlier your start, the more time you will have to compound interest.
2. Contribute to a retirement plan. After reading about compound interest, you may realize it’s time to start saving for retirement. If your employer offers a 401(k) match, look into how you can contribute. It is basically free money on the table. If your employer does not offer a retirement plan, look into other options. You should have some type of retirement vehicle either way.
3. Check your credit report. You should know your credit score and if you don’t you should find out. You can get a free credit report from each of the three credit bureaus once a year. This is the time to make sure there are no mistakes on your report. If there are any problems, you can get a head start on sorting it all out.
4. Have an emergency fund. It is essential to save for a rainy day. As responsibilities in your 30s increase, so does chances of unexpected costs. During this time it may also be increasingly difficult to put away money. Saving before your 30s is a good idea to have a nice safety net.
5. Pay off student loans. Student loans may have a low interest rate but they generally cannot be forgiven in bankruptcy. As your family grows, it may become harder to pay them off and becomes burdensome. If you have extra money, consider putting it towards paying down student loans.
6. Consider getting life insurance. Life insurance is something worth looking into especially if you say “I do” before you are 30. If anything happens to you or your spouse, you will be grateful for the financial footing going forward. Consider getting enough to cover any debt, funeral expenses, and to help your spouse get back on his or her feet.
7. Contribute to a 529 college savings plan. If you have any children, you should start planning for their college expenses. Starting a college savings plan, again, the earlier the more compounding interest potential you will have. While they are young, start contributing and you could potentially end up paying less in the end.
If you are near this 30 year milestone, contact a Wealth Advisor at Prosperity Wealth Advisors to discuss your situation. You can reach us at 813-321-1572 or by email at [email protected]
Source: Joanna, and Johnny. "7 Financial Tasks to Accomplish Before You Hit 30." DailyFinance.com. N.p., 14 Aug. 2014. Web.