How to be Financially Stable by Age 30

Posted on by Ryan

When it comes to money, nobody knows what they’re doing – at least not in their 20’s. Don’t worry – it’s not just you. Most individuals have no clue how to even begin planning for their financial future. But it’s time to start. With a little work, you could stop living paycheck to paycheck and subsisting on ramen by the time you hit 30. Here are six ways to help you move toward financial stability:

1) Pay off Your Debts

Astronomical student loan debts are one of the reasons our generation is having such a hard time getting any kind of financial traction. They’re downright brutal. But getting those in order will save you a lot of money in the long run.

If your student debts are low interest, worry about any high interest loans first. Auto or credit card debts are common snares for 20-somethings. They have high interest rates, so the longer you put off paying those, the worse it’ll be. Any loan with an interest rate over 7%, are the debts you should tackle first.

Bite the bullet and map out a plan for eliminating your debts over the next five years or so, so you can actually start saving for the future. The future – ugh…so ominous.

2) Budget and Spend Within Your Means

Go through your most recent bank statement and categorize all your expenses. Pick out what you can cut back on (did you really need that 3 a.m. Chinese food delivery)? Now comes the hard part: sticking to a monthly budget. Know what you’ll earn and how much you can spend on what and when. Keep track of every penny spent and keep your eye on the prize.

Spending well within your means is the first step towards having extra cash to save like a real grown-up! This personal budget planning spreadsheet is a particularly useful resource.

3) Set Short-Term Goals

This sounds like something vague you’d slap on a vision board or the like, but it’s an incredibly important habit to practice. Setting goals (and writing them down) truly does keep you on track.

Set career goals for yourself:

Where do I want to be in a year? Five years? Ten years?
How do I plan to get there?
How can I hone my skills and assets to make myself more valuable to employers?

Set financial goals:

I want to pay off my debt within two years.
I want to have a certain amount of money in my savings account by this time next year.
I want to be making a salary within a certain range by the time I’m 30.

Set personal goals:

I want to finish grad school with no debt.
I want to buy a house at 30.
I want to be able to start a family in the next ten years.

Whatever your goals, map out a plan to get there and you’ll most likely find yourself achieving them quicker than you expected.

4) Create an Emergency Fund

Rather than draining your savings account (which is a thing you should now have and be actively and consistently contributing to) when somebody rear-ends your car, you should start an emergency fund. Create an emergency account and regularly add money.

When you’re just starting out, it’s always a good idea to have about 3-6 months worth of your income stashed away for a rainy day is . There will be rainy days, and let’s be honest…you currently might not have auto or health insurance. Purchasing insurance is definitely a goal to consider if you want to be a true grown-up.

5) Start Saving for Retirement Now

Nothing says a quarter-life crisis like facing your own mortality! The absolute last thing on your mind is retirement. I recommend that you start putting away at least 5-10% of your earnings into a 401(k) or a Roth IRA.

If your employer matches contributions on a 401(k) plan, go with the maximum amount they’ll match, because that’s just free money, man.

Even if you still have debt, try to regularly contribute to the following:

Debt repayments
Emergency fund
Savings account
Retirement fund

It may seem like you’re getting nowhere fast, but that’s normal. As you start making more money, you’ll be able to add more money into each of the aforementioned categories until the debts are finally gone, your emergency fund is where it needs to be, and you’re able to set more long-term goals for your savings and retirement funds.

6) Grow Up

Now is the time in your life to give yourself a good hard kick. If you’re out of school, or will be soon, then it’s time to buckle down and be an adult. Jumping into a life without the structure of parental guidance or the education system can leave you feeling disoriented. However, you know it’s time to become financially independent, as well as financially stable.

Financial stability means planning for the future like a responsible human being, and not blowing all your money on a night out with your friends. Figuring out where you stand financially and where you’d like to be isn’t easy, but it has to be done.

Take a deep breath and set aside a day to do some planning. You’ve got this – you’re a grown-up now, even if you don’t quite feel like it. By the time you’re 30, you’ll feel like a financial ninja master. By 40, you’ll be a full-on money samurai. By retirement, you’ll be rolling in all the money you have worked so hard to save.

How to Save Gradually for Your Big Goal

Posted on by Ryan

Whether you’re saving for a wedding, an exotic vacation, or you simply want to establish an emergency fund after a financial crisis, you need a plan in order to achieve your big goal. Saving money isn’t always easy and if you don’t already have a habit of socking away a portion of your savings from each paycheck, now is a great time to start.

According to Bankrate.com’s June 2018 Financial Security Index, 27% of Americans surveyed do not have any money set aside in an emergency savings account. However, 72% of those surveyed who made more than $75,000 per year had at least three months’ in an emergency savings account compared to just 35% of those who made less.

Adopting and sticking to a gradual savings plan can help you set aside money for bigger goals while securing your financial future.

Use these tips to gradually save for a future purchase:

Set Weekly Goals

When you’re just getting into the savings mindset, it’s important to set small goals which will eventually lead to bigger goals. Try to save a certain amount of money each week and slowly build up from there, so you can stick with your plan and stay motivated. Give yourself some time to reach your smaller goals, so you avoid feeling overwhelmed before setting larger ones.

Use a Smartphone App

If you have a hard time keeping track of your money, download a smartphone app. Apps make it easy to visualize your savings goals and monitor your accounts at the touch of a button. You can keep costs in check and put together a realistic budget with the help of apps like Mint.com, Budget Ease, and LearnVest. Our personal finance app can also keep your finances in order.

Try Online Banking

One of the great things about setting up an online savings or checking account is being able to organize your funds easily, as well as create savings categories for different purchases. If you have a hard time keeping track of your goals and prefer to manage your finances online, consider opening an online savings account.

Shop around to find a bank that offers an online savings account with high interest rates and low fees. To help you get started, here is a list of some of the best online savings accounts for 2019.

Operate on a Cash-Only Basis

Make things easier on yourself and maximize your hard-earned dollars by making sure you are only spending a portion of what you have – and socking away the rest. Avoid using credit cards or loans in order to keep your finances in line and maintain realistic budget parameters.

Breaking the credit habit may be difficult at first, but it will be much easier to bolster your cash reserves when you are no longer relying on credit.

Be Very Specific About Your Goals

Sometimes you may lose the motivation to save money simply because you do not have a concrete goal. Not surprisingly, if you aren’t inspired, you will have a hard time staying the course. Write down at least two or three major savings goals and imagine how it would feel to achieve them.

Visualize going on the vacation you’ve always dreamed of, buying the car you’ve always wanted, or paying for your fairy-tale wedding without blowing your budget. Write down your estimated costs, so you can work with a clear goal in mind.

Financial Goals of Dividend Investing

Posted on by Ryan

When you decide that you want to become an investor, one of the first things you must do is map out your goals. Figuring out what goals you want to achieve with your investments will help you determine what type of investing you should do and what strategy you may want to use.

Your Goals are your Investing Guide Map

Your goal in investing is going to be your mission statement. The goals you set will help be a guideline for your investment decisions that you make in the future. When setting your goals, make sure not to be vague. Most people that are investing are obviously out to make money. The question is why are you trying to make money through investing. Maybe you want to invest in order to gain a higher return on your money so that you may be able to afford something in the future. Possibly you are investing so that you can build up a passive income from rents, interest and dividends to spend now or/and in the future. Whatever you decide, be sure to write out a clear goal statement and focus on it frequently as you advance through your investing career. Modify your goal if and when things change. Remember that it is OK if what was once your goal has now changed and you find yourself trying to achieve something different. Just make sure to formulate your investing plan with your goals in mind.

Dividend Growth Stock Investing Goals

There are a few different goals you may be interested in pursuing where a dividend growth stock investing strategy is a suitable approach.

Building a passive income from dividends for current needs

Rather then spend all your money from your paycheck, you may be interested in investing some money each month in dividend paying stocks. This will allow you to build up an investment portfolio over time and provide some supplemental income if you decide to take the dividends in cash to spend as the companies pay out.

Building a passive income from dividends for future needs

You may decide that you don’t need more of a current income to meet your current needs and wants. However, you don’t plan on working forever and someday that paycheck will quit coming in if you quit working. Building a portfolio of dividend growth stocks is a good way to build an income for the future. You can grow your portfolio quicker by reinvesting your current dividends and eventually the annual dividend income may be enough to cover your living expenses. At this time you can afford to not have to work for a paycheck and just live off of your dividend income. This is a good strategy for retirement.

Preserve investment capital

When you are looking for a safe investment to keep your money safe most people will thing of bonds. While bonds will help keep your principal safe, they don’t offer much in the way of investment returns. Another option if you are willing to take on a little more risk is dividend paying stocks. Stocks are definitely a riskier asset class then bonds. However, dividend paying stocks have typically been less volatile compared to other stocks. Dividend paying stocks offer a decent income component and if you select your investments wisely will give you better preservation of your capital then non dividend paying stocks. Compared to bonds, dividend paying stocks may be a little more risky in that you can lose some or all of your investment. However they also typically offer greater returns then you would receive by investing in bonds.

Good returns

Financial Risk Tolerance vs. Emotional Risk Tolerance

There have been studies that have shown that dividend paying stocks tend to outperform over time non dividend paying stocks. Also companies that annually increase their dividend payments tend to outperform companies that do not increase their dividend payments. So over the long run, we can hope that we will be getting the best return in the market from our dividend paying stocks of solid well known companies. You will probably be less likely to lose your money and earn a decent return from a Coca Cola type company compared to a company that you have never heard of and don’t understand how they make money. Dividend growth investors pick solid stable companies that have a history of increasing earnings and paying out increasing dividends. These companies perform well over the long run.

My Dividend Growth Stock Investing Goals

Personally, I am investing in dividend growth stocks for all the reasons I’ve listed above. I believe that dividend growth stocks will over time give me a great return with less risk to my investing portfolio. I understand that dividend growth stocks will pay me out an income this year that I can use for expenses if needed. My main goal when investing in dividend growth stocks is to build up a portfolio that will provide me with a sizable income later in life. I am 30 years old and have at least another 30 years of working for a paycheck. However, I’d like to build up a portfolio of dividend stocks that eventually will pay me enough income that I can retire if I want. I will be able to use the income from my portfolio to pay my expenses without ever having to sell any of my stock assets and decrease my portfolio.

So for my goal I have a long journey ahead of me. Short term I measure my success by tracking my dividend income on a monthly and annual basis. I expect to see these income numbers rising as time passes and if this is happening I will know I am on the right track towards achieving my investing goals.

In Conclusion

Before you get started investing, make sure to take a moment and think about what you are really trying to achieve. Figure out your goals and use them as a guide map for your investing decisions in the future.