Financial freedom is a term that has been thrown around quite a bit. But what does it mean, and how do you achieve financial freedom in your 30s? 🤔
Financial freedom is the point at which you no longer have to work in order to meet your day-to-day expenses. Instead, you have a substantial amount of money set aside that could take care of these expenses and leave you with excess cash for other things.
Millennials are often portrayed as a generation that values experiences over possessions, collaboration over competition and social impact over personal wealth. 💰
However, while this may be true of many young people today, financial independence and security remain the primary goal for most millennials.
In fact, a recent survey found that members of the millennial generation actually value personal finance more than any other generation.
Even if you feel like you have neglected your finances up until this point, it’s not too late to get back on track. 😌
Here are five steps you can take to become financially independent and secure in your 30s.
Develop a solid financial foundation
Before you attempt to achieve financial freedom, it is important to lay a solid foundation for your finances.
Start by creating a budget that accounts for your monthly expenses. It is also important to track your expenses in order to get a better idea of where your money is going. What isn’t measured cannot be changed. 🤷♀️
Once you have a better understanding of your expenses, you can create a budget that helps you to save more and spend less.
Next, get a good grasp on your credit score. Your credit score will impact your financial future, so it is important to understand how it works and how you can improve it.
Additionally, it is also a good idea to have a savings account and an emergency savings fund that has enough money to cover at least six months of living expenses.
Make saving a priority
One of the easiest ways to boost your savings and put yourself on the path to financial freedom is to prioritize saving over spending. 🙂
Aim to build your savings account as soon as possible by putting aside a specific amount every month. If you are employed, you may also want to look into setting up an employer-sponsored retirement account such as a 401(k) or 403(b).
You can also open an IRA account, which is a self-directed account that offers a range of investment options you can choose based on your risk tolerance, time frame and investment goals. 🤑
Another way to boost your savings is to cut back on expenses, particularly discretionary expenses like dining out, entertainment and shopping. Start small by focusing on just one or two expenses, and then expand from there as your budget becomes more streamlined.
Finally, you can also increase your income by taking on some overtime or taking on a side hustle.
Automate Your Savings
*Carrying on from my point above* 😂
If you have made it a goal to save a certain amount of money each month, start automating the process.
Open up a retirement account and an investment account, and have a portion of your paycheck go directly into each account.
If you have debt, consider making extra payments towards that. Every little bit will help you get out of debt much quicker.
You can also open a savings account to start building up your emergency fund. If you have an overdraft or credit card debt, you will be able to breathe a lot easier once you have the money in the account.
Build good credit
Your credit score plays a big role in your financial future, so it is important to make sure it is in good standing.
Your credit score is an indicator of how much money you can borrow from lenders.
Having good credit can help you save money on interest rates when you take out a mortgage or car loan and can even help you to get a job in some cases. 💼
Take some time to understand how your credit score works and how you can improve it over time. 🕒
Don’t rely on your credit card
Credit cards often get a bad rap, but they can be a useful tool if used responsibly.
A credit card allows you to make a purchase now and pay it off over the next 30-60 days. In fact, credit cards are one of the most effective ways to build your credit. 💳
However, credit cards can also be dangerous for your financial health if not used responsibly. If you’re not careful, you can end up with an insurmountable amount of debt that’s difficult to pay off. 😬
Instead of using your credit card, consider getting a low-interest debit card or cash-back credit card to make purchases. If you use your credit card, make sure you pay it off completely each month to avoid interest. If you don’t, you could end up racking up a lot of debt.
Pay off your student loans ASAP
Student loan debt has become a burden for many members of the millennial generation. In fact, the average millennial with student loan debt has £28,000 in debt, which is higher than the average for similarly aged members of Generation X or the Baby Boomer generation. 🥲
Although student loan debt can be helpful in some situations, such as if you have a degree in a high-demand field, most students would benefit from a more affordable form of higher education. 🤷♀️
One way to reduce your student loan debt is to look into income-driven repayment plans. These plans base your monthly payment on your income and overall financial situation.
Depending on your situation, you may be able to get your loans forgiven after a certain amount of time. If you don’t have the money to pay off your student loans, you may want to explore your deferment and forbearance options.
Generally, you can defer or forbear your student loans if you are unable to make payments because of financial hardship. It’s definitely something to look into. 🤔
Build your assets
Growing your assets includes building your savings, paying off your debts and investing in assets that will grow over time. 🏠
You can build your assets by starting a side hustle, maxing out your 401(k) or 403(b) and investing in long-term investments like real estate. If you have money saved, you can also look into investing in assets like stocks or bonds.
If you don’t have a lot of money saved, you may want to focus on growing your assets by working on some side hustles or freelance gigs. This will allow you to put more money into your savings account and build your assets over time.
Keep in mind that growing your assets does not necessarily mean spending a significant amount of money. You can also build your assets by reducing your ongoing expenses. 💰
Pay off high-interest debt
Although growing your assets is important, it’s also important to pay off high-interest debt, such as credit cards and student loans, as quickly as possible. 🏃♀️
This will not only help you to take care of these debts more quickly, but it will also save you money in the long run.
If you have high-interest debt, you may want to consider refinancing or consolidating your debt. This will allow you to refinance your existing debts at a lower interest rate, which will save you money in the long run. 💸
If you have credit card debt, you might also want to consider making a payment extra each month. This will let you pay off your debt more quickly and will also save you money in the long run.
Debt is a trap that will keep you from achieving financial freedom. If you can’t pay it off all at once, at least commit to making a monthly payment.
You will get a feel for how good it feels to be free of debt. You may find that you have more money each month to put towards savings and investments.
If you have a mortgage, don’t worry. As long as you are able to make your monthly payments, you will achieve financial freedom eventually. ❤️
Make sure you have enough life insurance
Life insurance is often a forgotten part of financial planning, but it is an important part of protecting your loved ones after your death.
The right amount of life insurance will vary based on your age, your family situation and your financial situation. 😊
In general, you want enough life insurance to make sure your loved ones are provided for after your death.
It is also important to ensure your life insurance policy is adequate enough to cover the financial obligations that depend on you.
Establish an emergency fund
With a healthy emergency fund, you can prepare for unplanned expenses like car repairs or medical bills. Establish an emergency fund that is large enough to cover at least three to six months of living expenses.
An emergency fund is an important part of any financial plan. It will let you sleep easy at night knowing that you will have the funds to take care of any unexpected costs that come up. 🏥
If you are ever between jobs, have medical issues, your car breaks down or experience any other financial emergency, this fund will be there to help you out and you’ll be glad you have that safety net. 🙃
The fund can be kept in a savings account so that it is easy to access in case of an emergency where you need to have access to your money straight away. You don’t have to put it in stocks or bonds to get a good return.
A big reason why people don’t save is that they have expenses. But if you have expenses, you have assets, too. What are those assets? They are your monthly living costs.
When you’re young, it’s easy to overlook these costs, but as you get older, you will realize just how important it is to save up 3-6 months of living costs. This is the ultimate financial freedom hack. 👈
Having 3-6 months of living costs in an emergency fund will also give you the flexibility to make those big purchases.
Whether you want to start a business, travel, or buy a house, having this fund will give you the freedom to take the risks you need without the added pressure of debt.
Invest in Yourself
It’s never too early to start planning for your retirement. But when you’re in your 30s, you have another goal to think about: investing in yourself.
This is the time when you can really set yourself apart from the crowd. Learn a new skill. Start a side hustle. Travel to new places. Do anything that you want to do in the early stages of your life. 😅
Education is a great investment. If you have the ability to attend school full-time, you can finish a degree/boot camp or a course and have a significant boost to your earning potential in a short amount of time. 💵
Commit to a Health Habit
Health habits are crucial to financial health. Taking care of yourself now will help you stay healthy and drive down your future healthcare costs. 🧑⚕️
Find a healthy habit you like and commit to it. You can even partner with a friend or family member to help keep yourself accountable.
Improve your diet, get more exercise, or start meditating. Your future self will thank you. 🧘♀️
Network and Ask for Help
As you get older, you will find that you have more in common with people than when you were younger. You will make connections at work, school, clubs, community events, and even online. 💻
This is the perfect opportunity to network and start asking for help. If you have financial goals you’re trying to meet, consider asking a fellow coworker for advice. If you have a friend who is a financial expert, have them mentor you.
You’re never too far away from someone who can help you advance in your personal and professional life. 🙂
The quarter-life crisis is a real thing and it can hit you at any time. Even in your 30s. If you’re in your early 30s and still struggling to get your financial life together, you might be wondering if there’s hope for you.
But don’t worry! You still have a few good years left before hitting retirement age. With the right attitude, determination, and discipline, anyone can achieve financial freedom in their 30s. 💕
Even if you feel like you have neglected your finances up until this point, it’s not too late to get back on track. In fact, becoming financially secure sooner rather than later will provide you with a sense of peace and independence that will last the rest of your life. 😌
Pin this post for a reminder 📌 👇