I am 24 years old now. Although I still have 6 years to entering my 30's still that 6 years is not that long right? :)
I was looking for a "list of things to be achieved by 30th". . but i didn't found it.
Instead i found this interesting article about financial freedom before going 30.
Have a pleasure reading.. =)
Being financially secure enough to enjoy your life in retirement is the last thing on the minds of those under 30.
After
all, with the stress of all the expensive "firsts" that often come
about during this period, like purchasing a car, buying a house and
starting a family, it's hard to even think about saving for the future.
However, working toward financial security need not be an exercise in self-deprivation, as many people assume.
Attaining
this goal even has some immediate benefits, as financial insecurity can
become a serious source of stress - something 20-somethings have enough
of already.
So can you achieve long-term financial security without sacrificing your short-term goals?
Read on for 10 tips on how to do just that.
1. Have Fun
Enjoy yourself while you are young - you will have plenty of time to be miserable when you are older.
Living
a successful, enjoyable and happy life is about achieving a proper
balance between time with family and friends and between work and
leisure time. Striking a proper balance between your life today and your future is also important.
Financially,
we can't live as if today was our last day. We have to decide between
what we spend today versus what we spend in the future. Finding the
correct balance is an important first step toward achieving financial
security. (For further reading, see Budget Without Blowing Off Your Friends.)
2. Recognize Your Most Important Financial Asset: Yourself
Your skills, knowledge and experience are the biggest asset you have.
Your
job and future career is the most important factor in achieving
financial independence and security. For those just entering the work
force, future career opportunities are as bright as they've ever been.
The large number of retiring baby boomers is expected to create labor shortages.
There
will be room to fill the positions held by these aging baby boomers.
Those who are in a position to take advantage of these opportunities
will benefit the most.
Look
at yourself as a financial asset. Investing in yourself will pay off in
the future. Increase your value through hard work, continual upgrading
of skills and knowledge, and making smart career choices. Efforts
to improve your career can have a far bigger impact on your financial
security than tightening your belt and trying to save more. (To learn
more, see Should You Head Back To Business School?)
3. Become a Planner, Not a Saver
Research has shown that those who plan for the future end up with more wealth than those who do not.
Successful
people are goal oriented: they set goals and develop a plan to achieve
them. For example, if you set a goal to pay off your student loans in two years, you'll have a better chance of achieving this goal than you would if you merely said you wanted to pay off your student loans, but failed to set a timetable.
Become a planner.
Set goals and develop an action plan to reach them. Even the process of writing down some goals will help you to achieve them.
Being
goal oriented and following a plan means taking control of your life.
It is an important step toward improving your financial independence and
security.
4. Set Short-Term Goals - Long-Term Goals Will Take Care of ThemselvesLife
holds
many uncertainties - and a lot can change between now and 30 years into
the future. As such, the prospect of planning far into the future is a
daunting task and in many ways, it's often an exercise in futility for
young investors.
Rather than setting long-term goals, set a series of small short-term goals.
These
goals could be a simple as trying to pay off credit card debt in a
matter of months. Maybe your goal is to contribute to your saving with a set salary reduction contribution each month.
Setting short-term goals that will help you to advance in your career is important in helping you get ahead. Remember, these short-term goals should be measurable and precise. You can't win a race if there's no finish line.
As
you achieve your short-term goals, set other short-term goals. Maybe
you want to buy a house, earn a promotion at work or buy a new car.
The constant setting and achieving of short-term goals will ensure that you reach your longer-term goals.
If
your goal is to be worth a million dollars by age 40, you cannot
achieve this without first achieving smaller goals like having $10,000,
$50,000 or $500,000.
5. Planning For Retirement: Fuggetaboutit?
Retirement planning is the last thing on your mind. So, if you have to for now, just fuggetaboutit.
If
you follow the other tips, you will not only be more financially secure
and prepared in the short term, but you will also be financially
prepared for the distant future as well.
However, if you take a few steps now to start saving, like setting up automatic monthly contributions to a retirement plan, compounding will work in your favor, which makes reaching your goal much easier.
If you implement this pay yourself first ideal, you won't have to worry about how much you're contributing; the most important thing is to develop the habit of saving.
6. Make Sure Your Lifestyle Costs Lag Your Income Growth
Many new graduates find that in the first couple years of working they have excess cash flow.
Still
used to their student spending habits, it is easy to make more money
than they need. Rather than using excess income to buy new toys and live
a more luxurious lifestyle, this excess could be put toward reducing
debt or adding to savings.
As
you advance in your career and attain greater responsibility, your
salary should increase. If the cost of your lifestyle lags your income
growth, you will always have excess cash flow that can be put toward
paying down debt, making investments, saving for a home, or achieving
any other financial goals you may have.
Where many people get into trouble is that they feel entitled to a standard of living that exceeds what they can afford.
However,
if you keep your standard of living below what you earn, you won't have
to cut back to accumulate money; instead, you will naturally have
excess cash flow because you earn more than you need to live on.
In
addition, keep in mind that trying to keep up with the Joneses is
always a recipe for financial failure. For all you know, you may make
more than the Joneses, who may be funding their lavish lifestyle with
debt anyway.
The
good life should be a reward for your hard work, good fortune and
successful planning, not something that you are entitled to. Once you
have established a certain lifestyle, it is psychologically difficult to
lower it. It is very easy to raise it.
7. Become Financially Literate
Making money is one thing; saving it and making it grow is another.
Financial
management and investing are lifelong endeavors. Making sound financial
and investment decisions is important for achieving your financial
goals.
The more knowledgeable and experienced you are in financial matters, the fewer mistakes you will make.
Research has shown that people who are financially literate end up with more wealth than those who are not.
There
is a strong monetary incentive for becoming financially sophisticated.
Taking the time and effort to become knowledgeable in the areas of
personal finance and investing will pay off throughout your life.
8. Seize the Opportunities: Take Calculated Risks
Taking
calculated risks when you are young can be a prudent decision in the
long run. You might make mistakes along the way, but remember, mistakes
are the lessons of wisdom.
You
often learn more from your mistakes than from your successes. Also,
when you are young, you can recover faster from financial mistakes, and
you have many years to recover.
Examples
of calculated risks might include moving to a new city with more job
opportunities, going back to school for additional training or taking a
new job at a different company for less pay but more upside potential.
Starting a new company, working for a small startup company, or investing in high risk/high return stocks, is easier to do when you're young. Younger people can afford to take risk, and the same opportunities might not be available later in life.
As
people get older and assume more family responsibilities like paying
off the mortgage or saving for the kids' education, many are forced to
play it safe and are unable to capitalize on riskier opportunities that
present themselves.
Taking
calculated risks when you can afford to do so is necessary to get ahead
financially. Playing it safe might be the bigger mistake in the long
run.
9. Borrow Money For Investments - Never to Finance a Lifestyle
As
mentioned before with the Joneses, you should never borrow to finance a
lifestyle you cannot afford. Using credit for a life you feel entitled
to is a losing proposition when it comes to building wealth. The
constant borrowing will assure that there is no money available for
investing, and the added interest expense of borrowing further increases the cost of the lifestyle.
Borrowing
money should be used only for investing - where your gain will outrun
your borrowing costs. This might mean investing in the literal sense
(for stocks, bonds, etc.) or it might mean investing in yourself for
your education, extra training, to start a business or to buy a house.
In these cases, borrowing can provide the leverage you
need to a reach your financial goals faster. Borrowing to meet
short-term desires is counterproductive. (To learn about your borrowing
options, see Different Needs, Different Loans.)
10. Take Advantage of Financial Freebies
Not many things in life are free. If you belong to a company pension plan, take the free money it offers and make sure that you contribute at least up to the maximum of what your company will match.
You can also look for (legal) ways to take advantage of tax laws that will result in a tax savings - in effect, the government is giving you free money to provide an incentive to contribute.
Conclusion: Achieving
financial independence is a goal most people strive for. It is not
necessarily easy, but it is achievable if you understand your
priorities, set achievable goals and take the proper steps toward
reaching them.
