The following is a post by MPFJ staff writer, Jeff.  Jeff writes about reducing waste, saving money and building freedom at his website, Sustainable Life Blog.
Since we’re talking about milestones to reach to ensure that your financial life is on track, we started with financial milestones to reach in your 20s. It’s time to talk about financial milestones that you should reach by the end of your 30s. By the time you’re in your 30s, you should have a solid financial foundation under you, with no consumer debt, a solid emergency fund, and you should be steadily contributing to your retirement account.
Your foundation will be critical, as this is the phase where many people purchase houses, have kids and do a bunch of other things that cost a lot of money. If you’ve got a solid foundation under you you’ll be able to easily weather these choices and make other moves that can put you further ahead. Here are a few things you should accomplish by the end of your 30s.
Save 15% (or more) of Your Income
Feel free to include whatever your employer matches as well as what you contribute to your retirement plans, but to keep yourself on track you’ll want to be saving 15% or more of your income at this stage. This will allow you to save for vacations, kids college and more. You’ll also have your own retirement to consider, and potentially aging parents to take care of. Having a solid buffer of savings (and the ability to keep saving) would be a great way to make it out.
Getting yourself in the pattern of a healthy savings rate will pay dividends down the road.
Make Sure Your Loved Ones Are Taken Care Of
This is one that’s crucial – at this stage, you probably have many people depending on you. A spouse, perhaps a child or two, and maybe even parents. You’ll want to ensure that if something were to happen to you, they would be taken care of. This means having adequate life insurance, making sure that your accounts have updated beneficiaries, set up health care directives and a will if you feel the need. You know what your loved ones will need if you’re gone, and you can help ensure they get it.
If you’re gone, you don’t want them to end up in court (or worse) if you have no plan for what to do when you’re gone. Don’t add added stress for your loved ones – they have enough to deal with already.
Start Thinking About Retirement Needs
How much money are you spending right now, and how much do you anticipate you’ll be spending when you retire? Once you know these numbers, you’ll be able to plan how much you’ll need, and figure out how much you will need to save to get there. While your budget right now might include kids expenses and a house that’s a bit bigger than you’ll be having in retirement you can still start trying to estimate your retirement needs. There are a lot of moving parts to retirement, such as when you should consider taking social security, as well as tax considerations.
Make sure that you’re getting the planning started so you’re not shocked at how much you’ll need in the future. There’s still time if you’re a bit behind.
How about you all? What milestones did you reach by 40, and were they crucial?
Share your experiences by commenting below!
***Photo courtesy https://www.flickr.com/photos/jamiesrabbits/11717173094/
