10 Financial Milestones to Achieve in Your 20s and 30s

Daniel Penzing
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Landing Your First Career-Type Position

If you have high hopes of landing a job at a start-up or independent company, you’ll probably have mixed feelings about milestones and benchmarks that indicate you’ve put in time.

If you’re supposed to be “doing your own thing” rather than working at another company, how do you know you’re succeeding? By following milestones in your career, there is a path to success, so whether you’re an entrepreneur, employee, or freelancer, your work is important and you shouldn’t feel ashamed to celebrate it.

How Mature is Your Financial Life?

Opening a Checking Account

Before you can start paying yourself, you need a way to pay yourself. That means opening a checking account and getting an ATM/debit card. This will help you budget your money by having instant access to it.

Starting and Regularly Funding an Emergency Fund

OK, this isn’t a big financial milestone, but it is an essential one. Any money you can put away for a rainy day, the better. This is the stuff you’ll want to tap into when the car breaks down or your boss takes it out on you for no reason. Start by setting aside 10% of each paycheck, and as you get a little bit better at budgeting and saving, raise that to 20% or even 30% until you've got at least a few months of salary.

Starting a Retirement Plan

Many young people decide to work more than one job at a time because they do not want to save their money. Because of this, many people start too late to save for retirement.

If you do not like the idea of saving until you are old enough to retire, you can make your twenties and thirties financially abundant by starting a retirement plan when you are young.

Investing Outside a Retirement Plan

When you start investing, you can open an IRA or a normal brokerage account to keep track of your investments. There are benefits and drawbacks to each depending on what you’re using the account for. The most important thing is to have some sort of account to keep track of your investments.

An IRA is a retirement account whereas a brokerage account, such as a Charles Schwab account, is not. An IRA will allow a person to invest their money in a variety of different stocks and funds, tax free, until they are retirement age. A brokerage account will normally require a couple of forms to be filled out and is used to track and buy and sell investments.

A brokerage account will normally require a little more paperwork than an IRA. Also, an IRA may be more beneficial if you have a higher income and will not be covered by IRAs tax advantages. Most IRAs will charge penalties for withdrawing money prior to retirement, but in many cases, a brokerage account will let you withdraw money whenever you want out of pocket.

Buying Your First Car

Most car owners could truthfully identify their car as a big part of their lives. They have become more than just a way to get some place- they are an extension of themselves. They are also something that people love to show off to their friends and family. As the saying goes, “You’re never a millionaire until you own a Ferrari.”

Buying your first car is a big deal … especially in this age of booming advertisement and image. It is not hard to get caught up in the hype and think of your car as just another status symbol that you have to have to be “cool.”

The first few times you drive your car around town, you will probably be filled with an overwhelming feeling of satisfaction and accomplishment. Just wait until that feeling starts to fade! Don’t let the intoxicating sense of pride and power from driving your car to work every day fool you. What will actually matter most when you take your car out into the real world is how it handles in the rain, snow or when you need to do a quick 360 to avoid an accident.

Buying Your First Home

If you’re like many of your peers, you’re struggling to keep your head above water. More than 70 percent of people between the ages of 25 and 34, for example, have some form of non-mortgage debt … and that problem is only getting worse.

Try to pay off credit card balances before buying a home.

Financial experts don’t recommend purchasing your first home until you’ve tackled any other debt. Using credit card and consumer debt to buy a home can put you at risk. This is because if you lose your job, then you’ll be even less likely to have the money to pay your mortgage.

If you can afford a home, then it’s probably a wise investment because the housing market typically rises. As a result, real estate has become a popular long-term investment.

If you’re ready to buy your first home, remember that you’ll need to find a lender and apply for a mortgage. The lender will review your budget, your credit score, and your debt-to-income ratio as part of the application process.

Paying Off Your Credit Card Debt

One of the best things you can do for your finances is to pay your credit card in full each month. The minimum payment option is your enemy.

That’s because most credit cards charge interest on the balance. And the credit card company gets to decide how much interest is due. This means that if you pay the minimum due each month, you’ll never dig out of your debt hole.

Instead, you should figure out how much you can afford to pay on the card each month and pay the bill in full. Then you can get rid of an unnecessary monthly payment, and you won’t have to pay any interest.

Not only that, but credit card debt is something that can follow you around for decades. It’s not like mortgage or student loans, where you generally have a fixed amount to pay off. Instead, it’s a mounting pile of credit card debt that will get bigger every month if you don’t do something about it.

The real danger is that you can lose everything you’ve worked for. That’s why paying off your credit card debt should be your first priority.

Overcoming a Financial Crisis

By now, you should hopefully have your car and home paid off. That’s great! It’s an accomplishment that not everyone can say they have. Now the question is, what’s next?

A lot of life occurs in your 30s and 40s, with kids, new homes, and life milestones. But you should always try to give yourself, and your money, time to breathe. In your 20s, you’re still trying to figure out who you are as a person and what you want to be doing. At the same time, you need to start accepting who you want to be and how you want to act. Being able to overlook your 20s is hard, but not everyone did it. Of course, it’s easier said than done.

Your 20s are sort of like the playground years; if you’re used to being on the playground, you’re going to keep coming back.

Paying Off Student Loan Debt

Since millennials are largely in their 20s or 30s, many of them are burdened with thousands of dollars of student loan debt – and the number of young people struggling with loans continues to grow. Once you’re in this situation, it’s easy to feel like you’re falling behind financially. There are plenty of online calculators that can help you figure out how long it will take to pay off your loan, but the reality is that it can seem like a long and daunting task.

Your mindset is everything – if you refuse to be defeated, if you refuse to let student debt deter you from using your degree, then you’ll figure out a plan that works for you. You can cut back on expenses, live with your parents, take a second job, get a part-time job on top of your full-time job and do whatever else it takes to get the job done. And when you do, you’ll be thankful that you did.