The early and mid-twenties are periods people begin to plan before the big 30! Wonder why you see many adults complaining about depression in their thirties?
The answer is quite simple; the quest to achieve or become something appears to be demanding and frustrating.
There is no best time to start planning for your future especially when it comes to financial freedom than in your twenties. This helps you to become financially independent before your thirties when you can choose to retire.
The big question is usually; what happens or will happen when I’m in my big 30?
Well, lots of things for sure are going to take place in your 30 especially, when you fail to plan your future toward securing financial freedom, you see your mates in your childhood neighborhood and in college taking over their financial world, or retiring as millionaires or billionaires in their thirties, these friends might lead you to depression.
When you see yourself incurring unending credit card debts without any means to pay them back from your current paycheck, it can cause serious damage to your mental health.
Your 30s marks an age where you begin to carry different responsibilities, some really great deal of work!
It is a phase in your life where you need to consider the prospect of upcoming responsibilities and get your finances in order. When you are able to establish yourself, financially, before your 30s you might think of retiring.
Consider the story of a millennial Grant Sabatier who was 24, had no job, and was living with his parent with a total sum of $2.26 to his name minus a $20,000 credit card debt that meant his net worth was in the negative territory.
But five years later with dedication and solid decisions he amassed for himself and his future a $1.25 million net worth. Now, financially independent he retired at age 30!
Studying his book “Financial Freedom” I came up with these 14 important tips to be financially free before you turn 30:
1. Set your goals:
There is hardly any sustainable success without properly laid down goals in life. Define what financial freedom means to you and give yourself a reasonable target and time frame to achieve what you’ve set.
Draft out a financial goal on the amount you want to hit as your net worth, which has to do with your ideal lifestyle during your retirement years, and how old you want to be before retiring.
Imagine having so many investments during your 20s before you reach 30 you might not really need to save more money because that money will be sitting in your investment accounts for a longer period of time, as it grows from time to time, there will be an increase in value.
Checkout: How to make a personal investment plan
2. Acquire as much skills as you can
To secure financial freedom that comes with stability is to learn a skill, a valuable one from your young age so when you get to the age of 30 you will be living off that acquired skill or skills. Learning a skill can pay off in diverse ways such as making more money from a side hustle, or developing yourself in a particular field of study.
Remember that you are your own investment. You could choose to invest in reading, writing, trying new stuff, taking on new responsibilities. Be ready to invest time and effort in yourself.
3. Get yourself a side job
When I read the story of Sabatier, he said there was a time he was working on 40 hours paid job. He did all the little jobs that paid him money.
He emphasized that no job was small at all as long as you get a reasonable paycheck after doing it. At the end of the day, all profits from this side hustle went into his savings.
If you are really considering financial freedom before thirty, you need to get yourself other streams of income that are quite different from your monthly or regular paycheck. That way, you can throw that extra income into your savings or investment account.
4. Adjust your budget:
It is one thing to have a good laid down budget; it is another to know how to go about it.
Budgeting is a very important plan of our everyday life that keeps us in check on how we spend our money. When you plan your budget, you know how much you have coming in and how much you have going out. When you are able to know this information, you are able to identify the areas that need adjustment and save money.
List out all your streams of income and your monthly expenses, you will spot the ones that are necessary and decide which are not important. Then you can cut off the unimportant ones and save up that money.
For more help, use free budgeting apps, like PocketGuard, that help in tracking your spending and finding creative ways to reduce expenses. If you’re a low income family, check out these 11 Effective Budgeting tips for Low-income Families
5. Always consider the true cost of your purchase
Most times we are eager to make a purchase of things without knowing their actual price because we feel the urge to buy those things which we may consider necessities.
Sadly enough, we don’t ask questions to see if we truly need those things we purchase or the actual price of such purchase.
Perhaps, what if the money about to be spent can be invested making some returns for us?
We pack things into the cart and simply press “checkout”. Always thinks of the true cost of every purchase, most times, there is a trade-off.
Knowing the actual cost of a purchase can also help us cut off unnecessary expenses, save the money to earn more on our part to financial freedom.
When money is invested, there is always an expectation of returns, but when it is spent impulsively, there will always be a financial problem.
6. Learn how to invest money
This entails more than just investing in a retirement fund. You should consider stocks, bonds, mutual funds, real estate, and other forms of investment.
Checkout: 4 Best Long-term Investments for Sustainable Growth
When you invest, you are using your money to make more money for yourself. Investment is recommended to be a lifetime project you should consider embarking on. Imagine investing and saving that little amount that comes in as a return; this could amount to millions of dollars in retirement!
Checkout: 8 Things to Consider before you start Investing
Learn more about investing and have in mind that they are also risky investments, which is why you need to know where you invest your money.
Checkout: 16 Ways to Invest with Little Money
7. Check your numbers frequently
Sabatier is particular about this. It really doesn’t take much time to check your numbers in a day, which ensures you are still working on your goal of being financially free. He recommended that people should start by checking their net worth and logging into investment accounts.
Always check how much you spend in a month. That way you can be sure of moving on the right track.
If you have other streams of income (which is very necessary), you need to check also on them as well as check bank and credit card accounts. Although, this can be too much of an activity, however, using a net worth tracking tool or money management app does all the work for you.
8. Save for the raining day
There will always be that point in your life where an emergency can happen. You won’t find it difficult or have to touch your savings if only you are keeping aside some funds for cases of emergency.
Being prepared on days of emergency shows that you are really working toward your goal of becoming financially free before 30.
Checkout: 15 Money-Saving Tips for Young Adults.
9. Have an insurance plan
Finding an insurance plan provides financial security during times of uncertainty. Do not allow a negative thought toward insurance to prevent you from setting up a plan for it.
Tragedy is unavoidable in life, nonetheless, with insurance, you could scale through some hurdles of life. Try getting yourself and/or your asset insured for the purpose of safeguarding yourself against the various mishaps life will throw at you.
Adequate insurance helps you toward achieving your financial goal.
10. Spend within your means
Oftentimes, people tend to spend just to keep up with others especially young adults. When we live to impress others we will live above our means, spending deep into our paycheck with little or no investment at all.
A big part of achieving this financial freedom before your targeted age is making sure you don’t spend unnecessarily because of social pressure as it is one of the fastest means to go bankrupt.
If you focus on your savings and investment goals now and make prudent financial decisions, you will reap the fruit of your labor in due time and in a very surprising way too. However, it doesn’t mean that you should not have some fun, just remember to always spend within your budget. Make room for entertainment in your budget.
11. Start up a retirement fund:
The whole idea of achieving financial freedom before 30 can be possible only when you decide to start saving money before that age; you start saving as early as possible.
Once you retire, you already have savings because you have worked for it before you arrive at that age. To help stay on track on track on the retirement fund, set up specific goals and objectives along the way. Have in mind how much you want to save before 30 so after that age, you can have smaller targets to hit that contribute to your overall goal.
12. Pay off your debts:
To aim at financial freedom before 30, do your best to pay off debts because this is a setback to financial freedom.
Learn not to pile up debt, devise a means to make down payments for debt or payoff.
Checkout: 9 Tips to Aggressively Pay off your Credit Card Debts
13. Save up bonuses
There is some money that comes to us as a bonus, especially money that we are not expecting. Learn to save up tips from people. When there is a rise in your paycheck, don’t be too quick to spend it, besides you never thought of having that money, hence, save it.
You will be surprised to see that by the end of the year the amount realized from the unexpected tips or bonuses you have saved.
14. Improve in your credit score
When you develop credit before your 30s it helps you open up financial opportunities not just in your 30s but for a lifetime.
When you develop a good credit score, you become eligible for better financial products, including credit cards and loans with lower interest rates.
Apply for different financial products when building credit and use them responsibly. As long as you pay off your balance and don’t miss any payments, you could see your credit score increase.
Taking bold steps to achieve freedom before 30 can be challenging and might look a little bit frustrating, however, looking at the life goal you want to achieve for yourself, you just have to give it a real go.
You can achieve anything you set your mind on. Always note that when you work for someone else, your earning potential is limited. When you work for yourself your earning potential is essentially limitless.
Florence is a personal finance writer, who is passionate about helping others attain financial freedom. She covers topics from side hustles and debt payoff to investment and retirement.