4 Money Milestones to Hit by Age 30

Life starts getting real at 30, so make sure you’re prepared financially.

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Your 20s are a time to establish your career, figure out what you want out of life, and get your financial house in order. The lattermost is especially important, because the sooner you get a handle on your finances, the more lifelong security you’ll buy yourself. With that in mind, here are four money milestones you should aim to hit by the time your 30th birthday rolls around. 

1. Build an emergency fund

When you’re on the young side, it’s easy to walk around thinking you’re immune to financial emergencies. But as you take on more responsibility, whether it’s in the form of buying a home, owning a car, or other such milestones, you’ll quickly learn that you need money in savings to cover unplanned expenses. That’s where your emergency fund comes in.

Ideally, that fund should have enough money in it to pay for three to six months of essential living expenses, so if you’re nearing age 30 and aren’t anywhere close to that, start cutting back on your spending until your savings look healthier. You can also look at getting yourself a side job on top of your regular job to generate additional income that you can stick in the bank.

2. Pay off your student debt

If you graduated college with student loans, you’re no doubt aware that those pesky monthly payments can wind up monopolizing too much of your income for comfort. That’s why ridding yourself of them by age 30 is a good goal to strive for. 

Once your emergency fund is complete, you can use the money you save by lowering your expenses or working a second gig to make extra payments toward your loans until they’re gone for good. (Or, if your earnings climb high enough, which might happen naturally at work, you may not have to cut your spending or work a side job to get your hands on additional cash.) Keep in mind that if you’re stuck with a high interest rate on your loans, which is likely the case if you borrowed privately for college, it pays to refinance to a lower rate. Doing so could lower your monthly payments and make it easier to shed that debt faster. 

3. Start building a nest egg for retirement

If you’re not even 30 yet, or are just reaching that point, you may not feel compelled to start saving for retirement. But socking away funds from an early age could help you amass some serious wealth by the time you’re older.

Case in point: Saving $200 a month over 40 years will give you a $479,000 nest egg if you invest that money at a 7% average annual return during that time (which is more than doable with a stock-focused investment strategy). But if you wait 10 years to start saving that same amount each month, you’ll wind up with just $227,000 instead. Therefore, if you haven’t begun funding an IRA or 401(k), make it a point to contribute some amount to either type of account by the time you turn 30. 

4. Establish a strong credit score

The higher your credit score, the easier it’ll be for you to borrow money affordably when you need to, whether it’s in the form of a mortgage, an auto loan, or a personal loan. The good news? There are things you can do to boost your score, the most important of which is to pay all of your bills on time and in full on a consistent basis. Your payment history is the single most important factor that goes into calculating your credit score, so keeping up with your financial obligations is crucial in this regard.

You can also help your credit score by making it a point to not carry too much debt at once. Another big factor that goes into establishing your score is your credit utilization, or the amount of available credit you’re using at once. A credit utilization ratio that exceeds 30% could put your credit score at risk, so if your total line of credit is $10,000, make sure to never carry a balance above $3,000. 

Finally, avoid applying for too many new loans or credit cards at once. Spacing out those applications could help keep your score in more favorable territory. 

The more financially sound you are by age 30, the greater your chances of staying on that path for life. Achieve these milestones by 30, and you’ll really have something to celebrate when that big birthday rolls around.