Ask the Money Coach: How Do I Make Turning 30 (Financially) Fabulous
Let’s face it. Most people don’t have access to a financial advisor. And if they do, those financial advisors may not take into account the human side of managing money – like how spending, saving, and stressing about it actually makes us feel. Cue the Nav.it money coaches.* We’ve long been helping people in the , but now you can write into our money coaches.
Money coaches are here to answer your money questions including what should be on your bucket list before you hit 30.
Dear Money Coach,
I turn 30 in a couple years and decided to make a list of all the things I want to do before I hit the big 3-0. On my top list of things? Swim with sharks, learn another language, and go to Paris. Buh, uh, I have no idea what things I should tick off with my money.
Income is the key to wealth generation over time, whether it be active or passive, so figuring how you’re going to make money in your 20s sets you up for life.
Also, ask yourself, do you have an emergency fund with 6 months of your monthly expenses saved?
Not trying to quash your fun here. This is so you can afford to swim with sharks, go to Paris, or take off for three months and still cover your expenses. Emergency funds are key to freedom and allowing you to check off all items on your bucket list from a place of financial security.
Have you paid off high interest debt?
Credit cards only drag your net worth and your credit score down. Paying off your credit card balances in your 20s and setting up good habits to always pay off credit cards monthly is a key to credit success.
As you grow your income, calculating the burden of your student loans and how you can potentially pay that off sooner rather than later is helpful if you want to put your money to other uses like investing and home buying. Consolidating student loans into the lowest possible interest rate also gives you a huge advantage over time. Check out our partners at Juno.
Finally, by the time you are 30 you absolutely you should be investing!
Because it’s NEVER to late to start!
The first place to start is with your employer: do you have a 401k and a match? If you can, always take the match, that’s your money waiting to be invested for you. If you have also already established a monthly savings habit then you’re on your way to wealth generation! Once you’ve funded your emergency fund, that savings can be directly placed in investments monthly. Mutual funds, ETFs, crypto, real estate investing, the world is your oyster on how you grow wealth and diversify your passive income. Remember: time is your friend when it comes to growing wealth, the earlier you invest the longer you have to reap a higher return.
Now, home buying by the time you’re journey?
Honestly, that is totally based on your own money journey. Some people know where they will live for an extended period, they like home ownership and all the responsibilities that come with it, or they like managing property as a form of income and investment. So home buying might be right for them. Others do not want to live in one place for extended periods of time, they don’t like managing property or renters, and they don’t like the idea of a mortgage. They may not have a problem renting and think it frees them up to invest in other things like entrepreneurship or the market. Take the time to ask yourself what you want out of your life right now and does it imply stability and financial responsibility?
Here’s what I did in my 20’s
In my 20’s, I lived in 8 different cities and 6 countries, so home buying was not on my radar. I didn’t buy my first home until I was in my 30s when I moved to a city where I planned to stay for an extended period of time. However, in my 20s, I did know I wanted to grow my wealth so I had the option to buy a home if my life took me to a more stable existence. That made me focus on saving and investing for a decade, which was the money I used for a down payment later.
Basics of homebuying
The rule of thumb is placing 20% down payment on a house helps you financially afford it and get better mortgage rates. Some people advocate for cash purchases to avoid being tied to a mortgage but that’s a decision you should talk about with your financial advisor.
I should note: home buying is not a joke.
Obtaining a mortgage is a complicated and potentially stressful experience. There are always more unforeseen expenses you have to accommodate at closing, like home owners insurance, taxes and any updates to the house that are needed.
Over time, there are also maintenance costs associated with homes. Yards, gutters, paint, plumbing they all have a maintenance cost, either in time or money. The upside is that you own your home and have a tangible asset that hopefully accrues in value. The downside is that you are tied to a responsibility that takes more TLC then they tell you.
If that feels right, it can be a great experience to own a home. If it doesn’t feel right, then don’t force yourself into that decision because it seems the trendy thing to do.
Feeling ready for 30 yet?
Money goals to have by the time you hit 30
Identify your preferred method to obtain income – both active and passive
*Just remember, that we are NOT your financial advisors, tax advisors, or legal advisors by simply accessing this site. Everything that you read or interact with on the site is for informational purposes only and you should contact a professional before taking action.