People tend to feel younger with each passing generation. It’s common today, to tell yourself that 30 is the new 20. Many take the idea to mean that it’s okay to take their time — to get married later, or to experiment for longer before they settle down to a career.
There’s at least one way in which 30 is the new 35, however. People taking their first steps into real adulthood today have more financial responsibilities, and far earlier, than their parents did.
Getting serious about your retirement plan is one of those things
To simply call your plan for your financial life past retirement a “retirement plan” can make it sound less important than it really is. With dependable corporate pension plans becoming rare, planning for what happens after you stop working at 65 or 70 needs to be right up there with core aims such as picking a career or starting a family. It’s no small matter to make sure that you have enough money to last you a quarter-century. Starting at 30 (if not earlier) is an excellent plan.
Setting 15% aside each month is the bare minimum. Stretching yourself to 25% is a very good idea.
Make sure you have enough for an emergency
An emergency fund is more than a couple of hundred dollars stashed under a couch cushion. You need enough to see you through between 6 and 12 months of unemployment, whatever may cause such a state — a layoff, a change of career, an illness, an injury or a mental affliction, or anything else.
It’s important to remember that a bunch of credit cards is not an emergency fund because once you do begin working again; the money will only keep you afloat from one month to the next. If you don’t pay off your cards quickly, you’ll see the interest rapidly mount.
If you can’t shake the feeling that you should be easily able to put back the money that you take out, you should try it right now. Take enough money out of your budget now, and use it to build an emergency fund. You’ll quickly understand how great a challenge it is.
It’s also important to build a short-term emergency fund. Having one can keep you ready for any kind of surprise expense — anything from a great bargain on an important purchase (maybe an attractive price on a new Dodge Challenger) to relocation for a dream job.
Save for your children’s college
Ideally, saving for your child’s college should begin even before your child is born. It can take that long to put enough together. College was never cheap, and costs are only expected to rise. In 15 years, by some estimates, a four-year degree at an affordable public college will cost as much as $75,000.
Learn how money works (and how your mind works)
Essentially, money is simple to understand — you have a certain amount, and you spend no more than what you have. In practice, however, this simple equation often turns out to be uncontrollable. Not only does life throw up unpleasant surprises, the mind can get very confused when it is presented with complicated financial products such as credit cards. Temptation has a way of making the mind forget that it isn’t possible to spend more than what one has.
Learning how money works — credit cards, savings vehicles, mortgages, etc. — the math that you need to understand the world of money, can be the single best move that you ever make. If you haven’t started learning personal finance yet, you should begin the day you turn 30. It can change your life.
Irene Peterson is a financial consultant, a role she has been in for close to a decade. Her informative articles talk about planning for retirement, the big purchases you’ll make in life and spending versus saving.
For more help on getting your finances in order, no matter what age you are, check out these articles.
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