If you’ve gained control of your budget and sticking to it, it’s time to start thinking ahead and building your wealth. To get ahead and stay there, follow these easy steps!
Max Your 401k contributions
If you’re not maxing out your 401k contributions, you’re losing money. Now, not everyone works a regular 9-5 with 401k options, so this may not seem fair to small business owners or entrepreneurs. If you are your own boss, open a tax deferred account or IRA Roth and contribute 15% of your take home. By maxing out your contributions to these types of accounts and leave them alone, you set yourself up for comfort with 6-7 figure savings.
Become A Homeowner
No matter how old you are, the best thing you can do for yourself is to buy a modest home as soon as possible and get out of the renting world. Save up a 20% deposit and get your credit to 700 for the lowest payments possible. In a lot of areas of the country, your mortgage payment can be half of what rent is in the same area would cost. Keep your eye on the housing market and buy when housing prices are low, and if a housing market bubble starts up, sell high. This will get you into position invest in your forever home once you’re ready to really settle down.
Learn how about the stock market and start a portfolio. Wealthy people can live off the interest from their portfolios alone, while amassing their wealth for future generations. Keep up to date on what’s going on in the finance world and diversify your stocks.
Negotiate Your Salary
Ask for what you are worth. Learn to sell yourself and your accomplishments and use them to gain ground each year on your salary.
Set financial goals and take the steps to meet those goals. Give yourself benchmarks along the way. Set time frames for when you want to pay off your student loans, your home, your car. Work your budget, work hard and free up those payments to pay yourself!
As your 20s begin to fade and 30 draws closer, you may find yourself beginning to to worry about getting your finances in order and taking your parents advice to heart about sorting yourself out. These are our top picks for financial planning for your 30s.
Boost Your Credit Score
If your credit score isn’t in the 700s, it’s time to start focusing on boosting that number. A higher credit score will make lenders much more inclined to get you into your first home when you are ready or get that new(er) car.
Pay off your credit card debt as soon as possible. This will help boost your credit score, but it will also free up your money to save, invest and play. Paying debt off quickly also saves you money on interest.
Unless you want to be paying your student loans off at 40, refinancing and paying off your student loans early can free up thousands of dollars that would otherwise go towards interest. Just make sure to check your loans for early payoff penalties.
Unless you are independently wealthy, retirement is decades away. Start saving for it now by taking advantage of your employers 401k plan. Opt for the highest percentage matching and then double your contributions. You’re paying your future self with your 401k, so set yourself up to live comfortably.
In the current economic climes, so many people are living paycheck-to-paycheck and are one emergency away from financial ruin. Protect yourself by starting and consistently feeding your emergency fund. The ideal is to have 6 months of expenses tucked away in the event of an injury or unemployment. This gives you peace of mind that should the worst happen, you have some time to get your ducks in a row.
No one wants to think about death. But by obtaining a life insurance policy, you’ll be protecting your loved ones. Establishing a life insurance policy in your twenties, when you’re young and healthy is cheaper and easier than when health issues begin to creep in later in life.