I am not 30…yet. I still have several years until that dreadful day, just kidding. If you are over 30 and reading this, let me tell you, you look really young. 🙂
If I could give some advice to my 20 year old self, it would be, know these 4 rules. They really should have a college class about budgeting and personal finance to help set us up for success in the real world. But, that is why I started this blog, to help us get ahead before we get too far behind with money and reaching our goals.
4 Money Rules to Know Before You Turn 30:
1. Emergency Savings
The most common question I get is Phil, “I just spent and arm and a leg on X (usually car) where does this go in the budget?” Having an emergency fund is crucial to living a worry free life, especially in your 20’s.
If you follow Dave Ramsey, he is spot on. Have $1000 emergency fund for random stuff and eventually have 3-6 months of living expenses saved up for emergencies. Once you spend from your emergency fund shift your savings into building this section back up.
Trust me, stuff happens and it feels so much better when you can cover it with cash because you planned for it. Many times our peers turn to credit because they have no savings…it happens, no judgement. Going forward I would recommend setting up a budget and set a goal to get an emergency fund in place.
Common Emergency Fund Expenses:
- House Stuff (HVAC, Appliances, Etc.)
- Medical Bills
Related Post: What They Don’t Teach Us In School About Money
Emergency savings is good for living comfortable today, however building long term wealth is important too. I wrote the post One-Step Millionaire Life Hack to motivate you to save money for retirement.
Basically, if you have a company provided 401k or 403b start putting money in it asap. When you are starting out I would recommend at least saving your company match (typically around 3%), this is basically free money they are giving you toward retirement. Eventually, the ideal amount of contribution is around 15%.
If there is one course that they should teach us in school it is Budgeting! Do you feel like you don’t have enough money each month to cover your bills? This is common when you don’t have a budget in place. 3 out of 4 Americans don’t budget, so don’t feel bad.
Budgeting is the number ONE key to my success. If you need a budget template here is the exact one I use. Please set up a budget and hit me up if you have questions.
Public Service Announcement - Big business/The Government is behind the student loan crisis. If schools taught us about money and budgeting, 18 year old kids wouldn’t be signing up for 6 figures worth of debt, in my opinion.
If they can rope us in to debt for the next 40 years then we enter into the rat race (Go to work – to pay bills - repeat) and “contribute” to their economy to keep up with our debt…makes logical sense. Consumer debt is not your friend and yes it is easy to get, but no it is not good.
Common Consumer Debts:
- Car Loan
- Boat Loan
- Credit Card Debt
- Any type of financing for stuff
Stay far away from consumer debt.
If you do the hard things, life will be easy.
If you do the easy things, life will be hard.
Is it hard to struggle and pay cash? Yes…so that means life will be easy.
Trust me I did it, I know exactly how it feels.
If you live like no one else now, later you can live like no one else – Dave Ramsey