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Balancing Freedom and Money: 9 Financial Lessons to Learn Before Turning 30
At your 20s, nothing feels better than being young, free and without any sort of financial responsibilities staring at you. With no bills to pay, no family to provide for and lots of fun and freedom, you may easily think that life is a bed of roses. Unbeknownst to you, it is a period when you are highly susceptible to making costly financial mistakes.
Turning 30 is a milestone, no doubt. But it’s also a period when the reality of life dawns at you – paying bills, repaying your student loan, catering for your young family, planning for your sunset day and so forth. At this stage of life, feeling economically overwhelmed is easy, and unless you learn to manage it well, your life might soon become a living hell.
Better start taking control of your finances right now!
Mastering the art of financial responsibility in your 20s can have a profound effect in the rest of your life, financially. It can alter the course of your life completely, especially if you do away with money foolhardiness and learn the dos and don’ts of money management.
So, if you haven’t clocked 30 yet and haven’t started figuring out how your future money-wise would look like, don’t waste time anymore. Remember, if you take good care of your money when you are young, it will most certainly reciprocate the favor when you start getting old.
With that said, the following are some of the most critical money management lessons to learn before you turn 30:
1. Stop Spending Your Entire Paycheck
You know what? Nobody ever got rich and financially independent by consuming the entire month’s pay.
According to a book titled “The Millionaire Next Door” by Thomas J. Stanley’s, one stark trait amongst all self-made millionaires is their modest spending. The book highlights the fact that the road to financial independence is to live like a pauper when making money and later spend it like a rich kid when you’ve made enough.
The best way to avoid spending your whole paycheck before you reach 30 is to ensure that you have a logical savings and investment plan for your money. You may choose to sign up to a profit-generating savings plan or use the amount to buy assets. Whatever you do, however, just make sure you NEVER live from paycheck to paycheck, especially when you are yet to hit 30.
2. Set a Savings Goal and Start Working Towards It
Being a young, moneyed fellow at your early or mid-20s might feel glamorous, especially with the feeling that you’ve finally made it. But what you probably don’t know is that this is the exact-same stage when as many as 70% of all people mess up on their finances. They start living large, incessantly spending on luxurious products and saving nothing.
For you though, don’t let the excitement of handling lots of cash get into your head. Avoid overspending on needless items and start cultivating a savings habit. Save for a big goal right now when you are still free and without lots of responsibilities.
Because saving amidst a lot of temptations to splurge isn’t easy, I’d recommend that you automate the whole habit. Set aside a portion of your income and make sure that it directly goes to your savings account whenever payday arrives. It doesn’t matter the amount you save, so long as the habit is consistent and you know that you are saving for your future.
3. Establish Wealth Goals
Just because you are 20-something years old doesn’t mean you are still young to own an asset. There’s no rule ever written, stating that being above 30 is the legal age to officially start being mindful of your future. You should start now; after all, the earlier you discover this, the better you will be.
So, on top of saving for a long-term goal, start dreaming of being a wealthy, financially stable individual. Write your dreams and plan for them, especially how you will realize them. Remember, money will not appear miraculously and you will not be a millionaire overnight – you’ll have to work hard for it.
One other key virtue here is to be realistic with what you would like to achieve and when. There’s nothing bad with a big dream or challenging yourself – just be a smart, skillful and dedicated individual.
4. Start Paying Off Your Student Loan
The last thing you would wish to still have at 30 is a huge debt of student loan following you all through. And to ensure it doesn’t prevent you from achieving your dreams in the future, just start repaying it.
I’m not saying that you repay it because it’s your obligation. I’m saying so since almost everyone aged 30+ regrets having not repaid it earlier. This loan has prevented millions of people from buying homes, growing their wealth and achieving their financial dreams.
Keeping this loan for longer also increases the overall debt. You will owe them more in interests and penalties, yet you will still have to repay them. It will cost you more for not repaying it early enough. So, the sooner you clear it off, the earlier you will start taking control of your finances.
5. Start spending according to a budget
At 20-something years old, budgeting isn’t something foreign to you. You must have learned a great deal about it in high school and later in college. The problem, however, is that you may have never started practicing the art of budgeting.
Now is the time to finally stop your wishy-washy habit of budgeting and seriously start sticking to your budget. Set aside a particular amount for each of your expenses and stick to it.
The essence of creating a budget right now isn’t just to identify where every coin from your earnings goes. It inculcates a habit of frugal, mindful and judicious spending on your head; a habit you will need for the rest of your life.
6. Get a Health Insurance Cover
You can’t be fully prepared for whatever the future will throw your way if you have no health insurance coverage. Life is unpredictable and you might not tell when the next life-threatening illness will strike. Yes – you are 25, 26 or 29, but don’t use that as an excuse to still party and live a careless life.
To be safe, therefore, don’t compromise on your health. Go for an insurance cover that you can pay comfortably, and start paying for it in earnest. Remember, the best thing with having a cover is the confidence that your future is safe and well catered for.
7. Take Control of Your Debt Situation
One of the greatest challenges that many 30+-year-olds fight isn’t the hassle of repaying debts, but the temptation of getting in debt again. On one end, there are credit card loans and auto loans, enticing them and on the other are mortgages.
At this stage, therefore, don’t view debt as normal and an unavoidable part of life. Instead, start taking control of them while you still have time to do so. Assess the number of debts you have and develop a formula of paying them off.
At 23, 25 or 28, it is not surprising to be in a deep web of debt. However, what matters is how cognizant you are to the number of debts you have amassed so far. So, just start looking for the best debt repayment programs lest you live the rest of your life repaying debts. The best, most popular method is the snowball effect!
8. Don’t Forget To Keep Investing In Yourself
Even after your college education is over and you have secured employment, don’t stop learning. Educate yourself by reading widely, enrolling in a short course or attend various work-related seminars.
There’s nothing wrong with enhancing your academic level – the wealthy, successful individuals do it all the time. In fact, quoting what Daniel Ally, a self-made millionaire, lives by, he says that educating oneself translates to prosperity.
Investing in yourself isn’t restricted to the mind alone. You must consider your health as well, especially because you are still young and healthy. Start living a healthy lifestyle by ditching all those habits that can jeopardize your wellness.
9. Do something that scares you
You are still young and fresh from school. This is the right time to start exploring beyond your limits and do something amazing. If there’s something you’ve always wanted to do, but couldn’t perhaps because of one or several commitments, now is the time to break free.
Break away from your fears and make yourself proud. Whether you have always wanted to start a business online, go on a budget vacay, take an extra course or just about anything that enhances your overall worth, go right ahead. Just make sure it has deep financial lessons beneath it!
Bottom line
There are hundreds of financial lessons that you must grasp before you reach 30 years. However, by condensing them to just nine, you get a perfect starting point on what to do first. If you think these lessons make no sense, just talk to a 30-something-year-old neighbor and ask them what their regrets are. Save, plan, invest and live a life that’s good for your financial future!
