7 Money To-Dos Before You Hit 30


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7 Financial Tasks to Accomplish Before You Turn 30

We originally wrote this article for DailyFinance, but it’s a timely topic for us since Johnny will be turning the big 3-0 in just a month. We’d love to hear any thoughts/tips you’d add to our list.

Over the last decade, 30 has officially pronounced itself the new 20. The millennial generation is taking longer to finish schooling, decide on a career and leave mom and dad’s place. The average age of marriage is at an all-time high — 27 for women and 29 for men.

And while some of those delays may be beneficial — the higher age of marriage translates into a lower divorce rate — other delays could have detrimental, long-term financial consequences. Luckily, we have you covered with this list of seven financial musts-dos to make sure you’re prepared for the future.

You’re only in your 20s once, so squeeze every last drop out of them. But don’t let this decade pass you by without getting your financial ducks in a row. And if you’ve already passed the big 3-0, you know what they say: There’s no time like the present.

​1. Learn the magic of compounding interest

However responsible you plan to be in your 30s, there’s one thing you simply can’t make up for — time. And when it comes to compounding interest, time is the secret ingredient. Here’s an example: If a 25-year-old saves $3,000 a year for 10 years in a retirement account, the $30,000 investment will grow to $472,000 by age 65. If a 35-year-old saves $3,000 a year for 30 years (a full 20 years longer), the $90,000 investment will only be worth $367,000 at age 65. The moral? Your money’s ability to make money babies increases exponentially if you let compounding interest start doing its thing while you’re still in your 20s.

​2. Contribute to a retirement fund

Based on what you just read about compounding interest, it’s a no-brainer that now is the time to start saving for retirement. If your company offers a 401(k) match, there’s free money on the table, ready to be put toward your retirement each and every month. If your company doesn’t offer retirement options or if you haven’t yet settled into your career, another great retirement vehicle is a Roth individual retirement account. You can contribute up to $5,500 a year, and you can take the principal out at anytime with no penalty, if needed. The important thing is to put your money to work now so your 65-year-old self can retire comfortably later.

​3. Check your credit report

If you don’t already know where your credit report stands, now is the time to make yourself aware. You can get a free credit report from each of the three credit bureaus once a year, and now is the time to make sure there are no mistakes on your report. If your score is lower than you realized or if you discover any inconsistencies or problems, you have a head start on sorting it all out.

4. Have an emergency fund

Saving for a rainy day is essential, even if you’re the luckiest person in town. As your responsibilities increase in your 30s, the possibility for unexpected costs goes up. And as your financial responsibilities increase, it could become more difficult to put away the money you’d need to get by for three to six months (a typical emergency fund amount). Preparing for a rainy day has to be done while the sun’s out, and your 20s is just that time.

5. Pay off student loans

If you’re one of the seven out of 10 college students who graduated with student loan debt, you might be approaching your 30s in the red. Student loans may have a low interest rate, but they cannot be forgiven in bankruptcy. And as you add a spouse, a mortgage and even children to your life, the ability to pay down your student loans may become more difficult or burdensome. If the extra money is there now, pay those loans down.

6. Consider getting life insurance

If, like us, you defied the marriage-age average and said “I do” before you hit 30, life insurance is something worth looking into. When you’re young and healthy, the costs are incredibly low. And should anything happen to you, your spouse will be grateful for the sure financial footing going forward. Make sure you get enough to cover any outstanding debt (including mortgages), funeral expenses and enough to help your spouse get back on his or her feet.

7. Contribute to a 529 college savings plan

While the average age of marriage is pushing 30, 44 percent of women have already had a baby by age 25. If you find yourself already in the throes of parenting, the time to start thinking about your baby’s education is now. By saving while he or she is still young, the amount you’ll have to contribute later will be significantly less. How? You guessed it — compounding interest via a 529 college savings plan.

Are you working to check any of these off right now? What else would you add to this list?

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19 Comments

  • Reply Amanda S @ Passionately Simple Life May 4, 2015 at 7:35 am

    Definitely working on 2 and 5! My priorities right now are not going out to party as often as possible but sending all my money to either my IRA or paying off those student loans! It’s tough saying no here and there, but the sacrifice right now will definitely be worth it in 20 or 30 years time.

    • Reply Johnny May 5, 2015 at 12:04 am

      Amen! You could always just throw parties at your place, tell everyone it’s BYOB, and charge at the door for your IRA fund. I’m sure your friends would love that. :)

  • Reply Ellen May 4, 2015 at 8:34 am

    We just started really putting extra money towards our student loans. After we get those paid down some, we’re definitely going to start putting a lot more money towards retirement. We do company match for 401K but I’m ready to get more in tune with our far future.

    • Reply Johnny May 5, 2015 at 12:07 am

      Awesome! Company match is an excellent starting place, and I’m glad to hear you’re taking advantage of it despite having student loans to take care of. High fives for Ellen and Co.

  • Reply Katie Ball May 4, 2015 at 12:26 pm

    WOW! I feel somewhat on top of things (I am 29, after all!)!!! Items 2, 3, 6, and 7 are things we are already doing! With 1 & 4 – since hubby’s one of those 20-somethings still in grad school, we don’t have a whole lot to contribute to savings other than retirement (state teacher’s retirement + a 403(b)) and college (a 529 plan). We do keep a small emergency fund but are also grateful to have parents who come to the rescue when big scary expenses (like car repairs) come around. And we’re working on 5… we’ll get there!

    • Reply Johnny May 5, 2015 at 12:12 am

      Great work. And you’re actually tackling #1 with your retirement and 403(b) accounts, so all you’ve got is 4 & 5. Enjoy the final year of 20-hood.

  • Reply Emily @ evolvingPF May 4, 2015 at 1:09 pm

    Great list! Maybe I will make one of my own as my husband and I are both turning 30 this summer. Not all of these apply to us and we decided to keep my student loans around because we have learned the power of compound interest (threw the payoff money into a taxable investment account while the loans were at 0% and are currently at 2%). The compound interest point is my favorite and your 20s is the most exciting time to learn about it if you follow through with point 2 as well. I’ve pulled my credit report a few times but I need to make it a habit!

    • Reply Johnny May 5, 2015 at 12:16 am

      Congrats on being fellow summer 30-ers. I haven’t thought much about it, but I think I’m a bit reluctant about the assumed maturity that one should have in their 30s.

      Sounds like you’re making the right call with that ridiculously low student loan interest rate.

  • Reply Danny @ Danny MoreBucks May 4, 2015 at 4:22 pm

    Joshua over at Radical Personal Finance has a thoughtful counter argument to the 529 savings plan, preferring a taxable account for the flexibility. Basically, a 15-20 year investment horizon is still considered somewhat short term, especially when you have a set deadline when you need to withdraw funds to pay tuition. If we happen to be in a down cycle when it’s time to pay for college, it’s the worst scenario to actually have to start selling off the 529. So, depending on your stat’e incentives, the rigidity of the 529 may not be worth the benefits of tax sheltered growth (Episode 158 if you’re interested).

    I do think it’s very noble to want to pay for your children’s college education though. Saving somewhere for that goal is the most important thing.

    • Reply Johnny May 5, 2015 at 12:22 am

      I’ll definitely check it out. Assuming we follow through with our CPA advice we published earlier this year, Sally might have a Roth IRA instead of a 529. But I still think I’d prefer a 529 over a taxable investment account and just be extra careful with rebalancing assets every 5 years and become more conservative the last 5 years. Especially since the tax incentive in NY is particularly favorable with a $10k state income tax deduction.

      • Reply Danny @ Danny MoreBucks May 5, 2015 at 5:09 pm

        Yeah, the state specific incentives really irk me. Our state only offers a deduction on the first $4,000 per household. That works out to about $100 in tax savings each year which makes the 529 less attractive.

  • Reply Kelly @ Money Millennial May 4, 2015 at 8:13 pm

    Great list! I think having a financial to-do list is essential for Millennials! I also think having a plan for your money is important too. If you know where you want your money to do, you can plan accordingly. If you know you will have a big purchase, like a home or a weeding, you can take the necessary steps to plan a head of how you can get there.

  • Reply Courtney May 5, 2015 at 11:18 am

    We are currently working on 2, 4, and 7. Man it is overwhelming! I would say though, we just bought our first home and we should have checked our credit earlier. We have worked so hard to have everything in our credit perfect- no late payments, no outstanding debts, etc. Well they went to pull our credit for our mortgage and we have a large loan that we DID NOT TAKE OUT! The bank admitted it was their error, but it caused so much chaos and frustration, especially since we were under tight timing to get our loan closed on time. I wish we’d checked it and worked it all out earlier! (I will add, we noticed this when we checked our credit last summer and had worked with the bank on it and they had told us that they’d fixed it. Obviously they didn’t, we shouldn’t have just taken their word for it.) So yes, CHECK YOUR CREDIT REPORT!

    • Reply Johnny May 9, 2015 at 11:41 pm

      Ugh, that’s the worst! It’s one thing if it’s something you did in the past and forgot about, it’s another thing when it’s something that you had no involvement in causing. Big time bummer, but glad it worked itself out. Thanks for sharing and warning the rest of us.

  • Reply Kel May 5, 2015 at 2:50 pm

    Do you have any tips or favorite recommendations on who go to with for a Roth IRA? I am contributing to my 401k right now, but I honestly don’t think I’ll be at this job for more than 2-3 years. Is it best to have an IRA with the same company as my 401k or should I comparison shop? What should I be looking for?

    • Reply Johnny May 9, 2015 at 11:48 pm

      Check out Step 1 over here: http://www.ourfreakingbudget.com/how-to-start-a-roth-ira/

      Basically you’re just choosing a “store” (brokerage site) that offers most of the same “items” (mutual funds, stocks, etc.) as others. Some will have less expensive transaction fees, others will have better looking websites, but all of it is secondary to actually choosing what to invest in. Since we’re big fans of Vanguard mutual funds, we opted to just park our IRAs with them. It’s easy, it’s free (if you invest in their funds), and it’s got good customer support.

  • Reply Meghan May 11, 2015 at 10:39 am

    I would love to increase my annual savings to work on #1. Where do you think the best place to store away savings and take advantage of compound interest would be?

  • Reply Melanie May 11, 2015 at 1:27 pm

    Wa-hoo! I turned 30 in February and I have done/completed all of these (other than the last two, since I am single with no children). But I should probably pull my credit report again and look over it just to be safe. Thanks for the reminder!
    Glad to hear 30 is the new 20… haha :)

  • Reply Sunday Link Love: Having it All + My Recent Adventures {May v3} March 11, 2016 at 2:22 pm

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