Yahoo Finance How To Go From Struggling in Your 20s to Financially Thriving in Your 30s
Your 20s is typically a time when you can go weeks surviving off of ramen noodles and pizza. Which is to say, it’s a time when you don’t necessarily expect to reach financial success.
But once you hit your 30s — that’s a whole other story.
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Maybe you’d like to have a solid nest egg in place, save up for a home, or be able to afford a luxurious vacation. All of that requires money. According to Melanie Musson, finance expert with Clearsurance, successfully reaching those goals in your 30s requires discipline.
“Make a change. If you keep doing what you’ve been doing, you can’t expect to end up in a different position in the next 10 years,” she said. “You have to create a plan and make a change.”
Musson continued, “Your changes can include everything from pursuing a career or employment in a field with the potential to make more money to cutting back on lifestyle spending to save and invest more.”
Below are some of the top tips from experts to go from struggling in your 20s to financially thriving in your 30s.
Get a Grip on Budgeting
“One of the first steps is assessing your financial health and developing a clear plan, akin to how businesses plan their equipment needs and financing strategies,” said Vincent Cerniglia, principal at Noreast Capital Corporation.
He added that by evaluating your income versus expenses thoroughly, you can identify opportunities to cut unnecessary spending and allocate more toward savings or debt reduction.
“I always start with one tip: track every dollar,” said Rhett Stubbendeck, CEO and founder of Leverage Planning. “It’s eye-opening. At [my company], we’ve helped clients spot surprising spending habits just by getting them to record their daily expenses for a month.”
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Side Hustles
“There’s real power in earning extra cash,” said Stubbendeck. “I often encourage our clients to find a side gig that matches their skills.”
He explained, “It could be anything from freelance writing to driving for a ride-share company. Extra income makes a big difference.”
Start Investing
Even small investments count, Stubbendeck continued. “Many young people are scared to invest, thinking they don’t have enough money. But even a few dollars here and there can grow over time. We recommend easy-to-use apps that help make investing less daunting.”
Ethan Keller, president of Dominion, agrees. “Long-term financial growth requires early investment.”
He noted that individuals who start early can use compound interest to see their investments grow exponentially.
“Opening a retirement account like a 401(k) or IRA and contributing regularly ensures a secure financial future. Investing across various asset classes, such as stocks, bonds, and real estate, helps manage risk successfully,” Keller said.
Create an Emergency Fund
“An emergency fund can help you deal with unexpected financial challenges,” said Keller. “This fund is a safety net, providing economic security during medical emergencies or unexpected car repairs and saving at least 3 to 6 living expenses to cover essential costs and maintain financial stability during difficult times.”
He continued, “When emergencies arise, people can avoid using high-interest debt or liquidating investments if they have a well-funded emergency fund.”
Leverage Financial Tools and Resources
Researching and utilizing diverse financial tools and resources is crucial.
“For instance, just as [my company] offers various financing options outside traditional banking systems, there are numerous financial tools and instruments young adults can leverage,” said Cerniglia. “These could include high-yield savings accounts, low-cost index funds for investments, and considering robo-advisors for automated investing with lower fees.”
He added, “Leveraging tools that fit your personal financial situation can compound savings and investments, akin to how businesses select the right financial products for growth.”
Build Up Your Credit
“Building credit responsibly is vital, much as businesses maintain strong relationships with lenders for future financing needs,” said Cerniglia. “Regularly monitoring your credit score, using credit cards wisely, and paying bills on time help build a positive credit history.”
He said this will be beneficial when you need to make significant financial decisions later, such as buying a home or financing education.
“Just as businesses plan their credit needs and payments to optimize financial growth, applying these principles personally can substantially improve your financial status as you approach your 30s.”
Tackle High-Interest Debt
“You should pay off the pricey debts first,” Stubbendeck advised. “This method, known as the avalanche approach, cuts down the amount you pay in interest, freeing up more money for your goals.”
Musson advocates for getting a side job to pay off debt. “Once your debt is paid off, you can experience greater financial freedom to get your money to start growing for you.”
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This article originally appeared on GOBankingRates.com: How To Go From Struggling in Your 20s to Financially Thriving in Your 30s
