I hate to be the bearer of bad news, but your 30th birthday is going to sneak up on you.
The good news for you, if you’re still in your 20’s, is that turning 30 isn’t the end of the world and there’s still time for you to make some smart money moves before it happens.
It can be difficult to start thinking about your finances in your 20’s since you’re probably focusing on school, starting a career and figuring out what you want to do with your life.
But honestly, this is the best time to focus on your finances!
When you take control of your money in your 20’s, it puts you ahead of the curve for later in life. Don’t believe me?
We started all 6 of the money hacks you’re going to read about when we were in our 20’s.
Now, at 30, we’re debt free and have built our net worth to over $300,000!! (Want to track your net worth? This can help!)
Enough of that though, let’s talk about a few smart money moves to make before you turn 30 so you can rock your finances too!
Smart Money Moves To Make In Your 20’s
You’re about to get 6 super simple, yet SUPER effective money management tips that will set you up for success!
We’ve used these tips and tricks to help us start living a debt free life that’s more intentional about doing the things we love the most! Heck, the first tip helped us get to a point where we might actually pay off our house this year!!
Let’s get to it!
1. Build A Financial Foundation With A Budget
This is going to sound ridiculous, but something as simple as creating a budget made the biggest impact on us being able to rock our finances!
Seriously, having a budget in place lets us know where every single dollar we make is going. When you tell your money where you want it to go, it allows you to focus it on the right things.
Here are a few of the things that creating a budget can help you do:
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I know what you’re thinking, budgeting won’t work for you. It’s too hard to budget. I don’t know where to start!!
Well, you’re in luck! We’ve got your back when it comes to budgeting. We created a FREE Budget Binder that has everything you’ll need to get your budget started or fine-tune the budget you already have.
Get Your FREE Budget Binder Today
It's time for you to take control of your finances so you can save more money and pay off your debt!!
If you really want to take your budgeting to the next level, we have two budgeting tools to help you get there. The first is a Printable Budget Binder that has everything you need to control your finances for the entire next year!
Our Premium Budget Binder is the same exact thing we use every month to manage our money. Take a look below!
If you want to learn more about the Budget Binder and what’s in there, you can check out all the details here.
The other option is this really cool Budgeting Spreadsheet that does all the math for you! This one is for all you budgeters that hate doing the math yourself!
We love these spreadsheets because they make tracking your finances really simple. Oh, and the net worth tracker is an awesome visual of the progress you’re making each month!
When you combine those tools with our favorite budgeting style, cash envelope budget system, you’re sure to be headed down the right path!
The cash envelope budget system has you create a budget, pull that amount of cash out of the bank and pay for things with that cash.
Once you run out of cash, you don’t spend any more money.
It’s a great way to control your spending and it’s a super simple budget system to use.
2. Start An Emergency Fund
What would you do if your car broke down and you had a $2,000 car repair bill?? How would you pay for it?
That might seem like a crazy thing to happen and you’re thinking it’ll never happen to you, but it happens all the time.
We used to be the same way until happened to us! We didn’t worry about it though, because we had a big emergency fund set up.
When you have an emergency fund set up it takes away the stress of big expenses during an emergency.
Unfortunately, studies have shown that nearly 60% of Americans don’t have an emergency fund that could cover a $1,000 expense! Are you one of them??
Don’t worry if you are, you’re going to fix that!
Starting an emergency fund in your 20’s is going to be a lifesaver when, not if, but when that emergency happens. It will happen someday so let’s make sure you’re ready for it.
I highly recommend you start working towards building a $1,000 Emergency Fund.
With your new budget in place from the tip above, you should know where you can start cutting back on spending so you can save money.
Use that money you save, along with the Emergency Fund Tracker in our Budget Binder to help you build that $1,000 fund.
Emergency Fund: How Much Is Enough??
This is a question we get a lot and it’s a really good one to ask if you’re not sure. We recommend starting with a $1,000 emergency fund but you should ideally shoot for a 6-month fully-funded emergency fund.
With a 6-month emergency fund, you will be well protected against any major expenses or worse, a loss of your job. That six-month fund gives you some breathing room to recover from most issues.
If you’re not sure how to determine the amount you need to save for your 6-month emergency fund, it’s pretty simple.
First, add up all your bills for a month. Then add up how much money you need for food, gas and other expenses just to survive.
I’m not talking about expenses like pumpkin spice lattes or a pair of New Balance shoes… I’m talking about going into survival mode and counting only the expenses that are absolutely necessary for you to get through the month.
Once you have that dollar amount added up, multiply it by 6. That will give you your 6-month emergency fund amount.
We have an emergency fund tracker in our budgeting spreadsheets. If calculates how much money you need in your emergency fund and tracks your progress as you grow it!
3. Pay Off Your Debt
Maybe you’ve got school loans or a car loan still hanging out there. You’re not going to want to carry that debt into your 30’s, let’s get rid of that while you’re still young.
I know it’s easy to get into the mindset of “I’m still young, I’ve got time to pay this off” while you’re in your 20’s, but wouldn’t it be nice to not have to worry about debt?
Put a strong focus on paying off your debt early so that you can focus on other, more important things, as you get older and move through your career and life.
Debt Snowball vs. Debt Avalanche
We recommend two ways of tackling your debt. We’ve tried both and the first recommendation below is the one that we have found to be the best for us.
You should try both and see which one you like better. Both are great ways to pay off your debt fast and have helped us reach a debt-free life.
The Debt Snowball
The first, and our favorite, is called the Debt Snowball. It was made famous by Dave Ramsey and is part of his 7 Baby Steps to financial freedom. It’s a really simple concept that works really well.
The Debt Snowball has you list all your loans/credit card balances from smallest to largest. You start paying off the smallest debt first.
Once that’s paid off, you use the money for that monthly payment to help pay off your next smallest debt faster.
You continue to compound (or snowball) that payment method until all of your debt is paid off. It works really well and we highly recommend this method.
We’ve got a spreadsheet for Debt Snowball Tracking in our Budget Binder… catching the theme, our budgeting tools have everything you need!
The Debt Avalanche
The second method is called the Debt Avalanche. It’s a similar concept as the debt snowball, except you list your debts from highest interest rate to the lowest.
You then pay off the loan with the highest interest rate first and proceed just like the Debt Snowball after that.
4. Fix Your Credit Score
You might only be in your 20’s, but it’s never too early to think about raising your credit score.
I know you’re probably not thinking about buying a house or a new car right now, but someday you will be and when that time comes you’ll want a good credit score.
Let’s face it, at some point in your life you’re going to need to take out a loan. You don’t want to get screwed with a high-interest rate, or worse, get denied for a said loan because you tanked your credit score in your college days.
Focus on building your credit score in your 20’s so that you can buy that house of your dreams in your 30’s without having to ask your parents to co-sign… that’s not cool.
What Is A Good Credit Score
If you don’t know anything about credit scores, the basic idea is that lenders look at a 3 digit number based on your credit history. Your credit score will be between 300 and 850. The higher the number, the better.
Anything above a 700 is considered good credit. That’s what you should aim for.
Simple things like paying bills on time and keeping debt balances low help bring your score up.
There are a lot of traps out there you can fall into that will hurt your credit score. Here’s a list of 7 Ways To Avoid A Bad Credit Score to help you avoid a low credit score.
One thing I recommend is checking your credit score at least once per year. We use Credit Sesame to check our credit score and if anything looks out of place, we start digging into it.
Head over to Credit Sesame and create a free account to check your credit score right now!
5. Invest In Your Future
Ask any investor out there and they will tell you to start investing as early as possible!
That doesn’t mean wait until right before your 30th birthday, start investing as soon as you have some extra cash to do it!
There’s this amazing thing called compounding interest on your investments that makes your money grow exponentially. The longer time it has to grow the more money you’ll end up with. Check it out below!
If at the age of 22, you started investing just $200 per month and got an 8% return, your investment would be worth over $1,000,000 by the time you retire! How crazy is that??
Now let’s look at your investment account if you wait until you’re 30 to start investing the same way.
Spoiler Alert!! It’s not as cool.
Don’t get me wrong, Half a Mil is still a large amount of money, but not enough to retire with. Wouldn’t you want that full Milli?
Compounding interest plays a huge part in helping you retire rich. Make sure you start investing as early as possible to take full advantage of it.
Let’s talk about some of the great ways to start investing.
Invest In Your 401K
Does your company have a 401K? Or better yet, a 401K that they match?? If you work for a company that has a 401K match program, you need to be putting money into that.
It’s basically free money for you! Who doesn’t love free money?!?
Maybe a 401K option isn’t available for you, there are tons of other ways to invest.
Put Money In A Roth IRA
A Roth IRA is a great way to invest in your future. This is a long term investment tool that you contribute to until you hit retirement age and even after that.
The main benefit of a Roth IRA is that when you start pulling your money out in retirement, it’s not taxed.
However, you can’t pull money out of your IRA before you hit 59 and a half years old without tax implications and you can’t deduct your contributions on your income taxes.
Index Funds Are A Low-Cost Investment Option
Index Funds are a great way to start investing towards retirement. They’re basically a portfolio of stocks and bonds that mirror a major financial market index like the S&P 500 or Dow Jones.
Index funds are a really easy, hands-off way to acquire a well-balanced portfolio. They come at a low cost with minimal maintenance fees because they are not actively managed.
Look to investment firms like Vanguard or TD Ameritrade for help finding the right Index Fund for you!
Make Money With Mutual Funds
We’ve been investing in Mutual Funds for almost a decade now and they were critical to helping us build our six-figure retirement account.
Mutual funds are similar to Index Funds except they are actively managed. A fund manager moves money around in the fund to chase the best return. Sometimes they win, sometimes they lose.
We have had really good luck with our Mutual Funds, they have been crucial in building our net worth to over that $300,000 mark!
Unfortunately, mutual funds come with a higher fee than index funds. That fund manager has to make his millions somehow!
Look into mutual funds if you are hoping to have someone making money moves on your behalf.
6. Side Hustle Your Way To Wealth
I’ll tell you a little secret, blogging wasn’t our first side hustle. Nope, we’ve tried just about all the side hustles out there.
We started side hustling back in our mid 20’s and it took us until we were 28 to find the right one.
At some point, you’re going to realize there are tons of ways to make money in your spare time.
Here’s a list of some great ways to make a little extra cash if you’re not looking for a full-blown side hustle.
For us, running this website and providing great content to our readers is our side hustle.
Just a couple hours a night, 5 days a week and we have built a blogging business that helped us bring in over $20,000 in a single month!
That kind of money from a side hustle doesn’t come overnight though.
You have to be willing to put in the work for it.
Get started with a side hustle in your 20’s and who knows, maybe you’ll be able to take it from a side hustle to your full-time job. That’s what our plan is!
There you have it, 6 Crazy Simple Money Moves To Make Before You turn 30. These steps are going to help you crush your debt and grow your net worth!!
Don’t worry though, even if you’ve already hit your 30’s, you can still use these tips!
Leave a comment below if there are any other tips you think we should add to the list!
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