What money milestones should you be hitting?

By Jenn Taft
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Getting your ££ on track in your 20's & 30's may not be a priority, but having goals might set you up for the future.

As much fun as there is to be had in your twenties and thirties, it’s important that you don’t neglect looking after your finances. You are in the prime of your earning years, so have a look through these milestones to see how best to use your money.

In your twenties… Look after what you have

Budgeting properly is essential in your twenties. You are hopefully earning a constant wage each month in your first career minded job and it is likely you will want to treat yourself simply because you finally can. By all means buy yourself nice things with your hard earned cash, but do realise that you don’t need to buy everything you have ever wanted! If you can successfully budget in your twenties and make a good start on creating savings then you will set yourself up well for your thirties and beyond.

Use a budgeting app to help you see where your money goes each month and to make sure you don’t spend outside of your means. What goes out should not be more than what goes in and the sooner you can get on track with this the better. If you need a extra helping hand to propel yourself into gear, we’ve got our 4 week money course to give you the best tools & tips to manage your money like a boss. To sign up, click here.

Where can you put your money?

As scary as it may seem, there’s no reason why you shouldn’t look to invest your money in your twenties.

So what should you invest in? Shares are small stakes in companies who are floated those shares to the public to help raise money. The value of those shares can go up and down, so it can be fascinating to see whether your money makes a return or not. Be warned though, it can take time to learn to invest successfully and in that time you may lose some of the money you put forward. Your twenties is considered a great time to invest because should your investment not work out you have a whole lifetime ahead of you to make the money back. Not sure where to start? Have a read of this guide to help you understand investing.

If you do not have a savings account already then you could look to apply for an ISA, or Individual Savings Account. These accounts have tax relief on £15,240 each year, so your money can grow successfully without the tax hit. There are a few types of ISA, like a cash or equities ISA, to choose from so you are in a position to really make your money work for you.

You could also think about planning for your retirement by putting your money into a pension fund. Not sure what this involves? Have a look at our article here for some tips on building a pension ready for your retirement.

What does it all mean?

Have you ever watched the news and noticed the vast array of financial jargon that is used? Well what if that jargon could in fact give you some extra help with your finances and help you find the right services for your money?

Take a look at our handy guide on translating these jargon words here, it’s good to get clued up in your twenties so that it could help you put your money to better use. I know I wasn’t aware of half of the things I could do with my money and learning some key terms has made me far more confident in how I invest my money and the advice I seek. By having a good understanding of financial services and products you could see your credit history flourish. Take a look at your credit report so you where you are starting from.

Emergency funds for life events

Having a little bit of savings is a given really, but does what you have saved cover emergencies if they occur? For example, if you washing machine broke, or your car broke down and needed expensive work doing to it.

It is advised that you have around 3 times what you would spend in a month saved in an emergency fund. So if your outgoings – bills, rent, nights out, shopping – total £1000 a month then you should have around £3000 in savings. That might seem a lot but by being a little thrifty for a while you will save that quite quickly.

A great idea in these situations is to take advantage of cash back offers. Some credit cards offer you money back when you make a purchase, and frequently items like white goods come up in these offers, providing you with money to put back into your savings. You can also sign up to websites like Quidco or Top Cashback - if you’re going to be doing the shopping anyway it’s worth making some money while you do so!

And in your thirties? What are your long term plans?

If you have set up your budget in your twenties then you can plan better for long term goals in your thirties. These could be moving somewhere new, planning for childcare for any future children, further education or specific business pursuits, and having a clear budget will allow you to accommodate such goals.

At this point you should be able to make it through a month without spending every single penny you make. Living from pay check to pay check can leave you with very little fall back if you need it so planning for long term future goals is good practice.

We are family!

Your thirties may be the time when you will need to factor new family members in to your finances. You might share a joint bank account with a partner, or have children and need to think about buying them food and clothes each month. If you can factor these in early enough then you will have a contingency in place ready and nothing will come as a surprise!

To really provide some security for your family it is worth considering taking out life insurance. A life insurance policy will give you the peace of mind that if something were to happen to you then your family will not be financially compromised. For example I know that if I were to die my life insurance will pay my mortgage off so that my husband is not left unable to pay the bills for our home. And should we both pass away then the policy provides the finance necessary to bring my children up. Sound like the security you want? Have a look here to help find the right life insurance for you.

Got a credit card?

Having credit card can help you to manage your spending, and there are some great credit cards that can meet your specific needs. If the spending gets out of control though the debt can be a real burden and it’s therefore important that you prioritise clearing your credit card debts now that you are in your thirties. You are likely to have more specific outputs for your money – savings, family, a house – and to have credit card debt can hinder your ability to manage this successfully.

If you need help to manage your debt then make sure you get advice and stick to any plans you put in place to clear it. The sooner it is clear, the more likely you are to steer clear of future credit card debt.

Helpful websites

Have a look here for help with credit card debt.

The Money Advice Service can help with planning your finances for a family.

Get yourself a budgeting app to help plan out your finances carefully.

Top Takeaway

In your 20s

- Start to budget. Now you have a steadier income make sure you have a good grasp on what you spend it on. Download a budget app and plan it out properly.

- Invest your money while the risk is salvageable. You could really increase how much you have by investing and still know that if it doesn’t work out you have time to rectify it.

In your 30s

- Work out what your long term plans are and put the plans in place to help you budget for them. If you have a plan you are more likely to meet the goal.

- Clear credit card debt as soon as you can so that it isn’t hanging over your head.

 

By Jenn Taft

Jenn is a freelance writer and physics teacher from the West Midlands. She has a love of writing about personal finances, especially how they change when you become a parent, and enjoys the honesty that such writing brings. When not writing, teaching or being a mum, Jenn loves nothing more than indulging her love of hospital and police based documentaries, and cake.

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