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Before you turn 30

1017 storyHit the ground running with these nine financial to-dos

With Emily Piehl, twenty-something Speech and Language Pathologist, Wisconsin Dells 

Our 20s are a springboard into adulthood. These precious years are peppered with big life moments: Graduating from college. Getting a job. Moving into your own place. Getting another job. Maybe getting married, buying a house, or having a baby.

Every big life moment is accompanied by new responsibilities and decisions. And each has a financial component. How you plan for and handle these big moments can have a rippling effect on the rest of your adult life.

Here are some financial milestones to aim for before you turn 30 and tips that could give you a big boost later in life. Tending to these tasks now can help you achieve financial independence later.

Emily Piehl, third year Speech and Language Pathologist in the Wisconsin Dells school district, isn’t wasting any time. This twenty-something is financially self-aware and is taking advantage of her 20s.

“It takes a lot of planning. Especially someone my age who is just coming out of school. Getting a job and having an income is an exciting thing, but it’s important to hit the ground running and plan for what’s important to you and set priorities. That wasn’t necessarily surprising to me, but it really required a lot of attention from early on."

Launch your career—find your passion

There’s not much financial planning to do without gainful employment. Twenty-somethings should be actively exploring or pursuing a career path that considers their passions, skills, and personal goals. This can be challenging and there may be some trial and error in the process because, let’s face it, your first job may not be a perfect fit. Even with a degree, there is a lot of career tweaking that can take place—whether you're in the classroom or taking your first job in the business world.

Be a sponge and learn as much as you can from every job experience and those with whom you work. The knowledge you gain will help you define your path. You’ll learn what you are good at, what you like to do (and don't like to do), and you’ll gain an appreciation for what every job takes, even if it's not for you.

The education field is a passion driven profession. So, for many like Emily, the love of learning and the desire to work with children brought them to the classroom.

“Both of my parents were teachers. I grew up knowing that school is where I wanted to be. It’s a very comfortable place. The diversity of my job—I work with kids of different ages and abilities and interests—makes it really fun for me. I am also a Spanish speaking educator who works with families. This provides many opportunities to say,'This is cool, this is why I’m here.'”

Manage your money like you mean it

Take charge. Immediately after you receive your first pay check, sit down and set up a budget. Not having a budget—and not knowing where your money goes—is a critical (and common) mistake that can cause financial woes that are difficult to rectify. Formalize it on paper or a spreadsheet, use our budget worksheet, or Google the many free online budgeting tools and templates available. Budgeting is basically differentiating between your needs, your wants, and your dreams. It’s about making financial priorities and not spending more than you earn.

“I have my own system for budgeting, although it isn’t as formal as a spreadsheet or software. Scratch paper works just fine for me. I think the key is finding a system that doesn’t make you anxious but still helps you stay organized. I estimate my monthly expenses for rent, utilities, union membership, etc., and I also make a savings goal at the beginning of each month. I treat this goal as a nonnegotiable expense—it’s 'untouchable.' Some of my money goes automatically into my 403(b) and some of it is kept in a money market account."

Secure your lifestyle

As an adult, you are responsible for protecting yourself and your stuff. You can also be held responsible to others for damage or harm you may cause—like in an accident. Whether it’s a car accident, a fire, or a trip to the ER, the expense can add up fast and have a detrimental effect on your present and future financial wellness. Insurance is designed to protect you from catastrophic financial loss. Take some time to learn about how insurance fits into your financial picture, what insurance coverages you need (ask about umbrella insurance), and then build it into your budget.

Renting? Seriously consider renters insurance. This often overlooked and misunderstood coverage is economical and not only protects your stuff but also provides liability coverage (think slips and falls).

"I initially obtained renters insurance at my parents’ recommendation when I got my first apartment. At one time, I lived in a building that sustained fire damage in one wing (not mine, thankfully) and since then I have enthusiastically paid for it every year. It's relatively inexpensive and essential should anything ever happen.

"I also have health, dental, and short- and long-term disability insurance through my district."


Claiming your 20s is one of the most transformative things you can do according to Meg Jay, Ph.D., author of The Defining Decade: Why Your Twenties Matter--And How to Make the Most of Them Now. In her TED talk, Jay says that the 20s are a developmental sweet spot in part because 80% of life’s most defining moments take place before age 35 and 70% of wage growth happens in the first 10 years of a career.


Reduce debt, build credit

Not all debt is bad. Good debt is typically a low-interest loan tied to an investment that can gain value—like a house or an education.

If you have a college degree, chances are good you have debt. While this is a difficult financial place to begin your adult life, own it. You took the loans, invested in yourself and your career, and now it’s time to start paying it back.

Get to know your student loans if you have them and set up a repayment plan. Look at all the opportunities for getting them reduced or forgiven. (There are special programs just for educators. Check studentaid.gov.) Make an immediate impact on your loans by setting up automatic payments. Doing so could reduce your interest rate by 0.25%.

Be cautious of bad debt that carries high interest rates—like credit cards. A barrage of card offers will come your way (if they haven’t started already). They’ll entice you with a really low introductory rate, but that will eventually spike to double digits.

Make sure you know the terms of the cards, use them sparingly, and always pay off your balance in full and on time. Crazy as it seems, using a credit card wisely can help establish your credit. The key is to make sure you are establishing “good” credit by managing your use. Let bad debt get out of control in your 20s and you’ll spend your 30s paying for it.

"I have two credit cards—one that I use only for travel that has a very low credit limit, and one I use for regular purchases. I pay off the balance every month and set mental limits for how much I plan to charge each month. Granted, there are unforeseen expenses and times of the year that are more expensive than others, but I factor that into my monthly budget."

Listen to your elders

You may not think boomers are as “lit” as they used to be (boomers, that means “cool”), but they’ve got hindsight, which is almost like insider information. This makes your parents and older colleagues a wonderful resource. Listen and benefit from their knowledge, experience, regrets, and mistakes. When it comes to finances, the economy has changed over the years, but the fundamentals of money management remain the same.

"My dad has had a 403(b) account since he started working in the 1970s. And for a long, long time I heard about how much that was benefitting him and my mom. Now that my parents are both retired, it has made me more aware of the impact that has had on what they are able to do. And that motivated me to follow the same path and start saving right away."

Shore up for emergencies

Stuff happens and sometimes it’s expensive. Having a little cash set aside for such emergencies can alleviate some stress. Work toward creating an emergency fund that could cover your living expenses for three months. You don’t have to build your fund overnight. Start by setting smaller, more attainable savings goals—like $500—and grow it from there. Don’t be discouraged if unexpected expenses force you to tap the fund. That’s what it’s for.

"I have funds that I reserve for unexpected auto expenses or repairs and other potential emergencies. Fortunately, I’ve never had to use it, but I appreciate having it there just in case."

Save for retirement now, today—posthaste

That’s not a typo. Yes, we said, retirement!

Stop laughing. Starting to save for retirement in your 20s is probably the single best thing you can do financially that you will never regret. The fact that retirement is decades away is exactly why you should start saving for it now. Money invested in your 20s has much more time to grow, so you have a longer timeline to reap the benefits of compounding interest. That means you might not need to set as much aside later on in life.

Start small but start now. Work toward saving 10% of your income now, and plan to increase that to 15% in your 30s.

According to the Pew Charitable Trusts, almost half of millennials who have access to employer-sponsored retirement plans (such as a 403(b)) do not participate in them. Don’t be one of the nonparticipants. Not starting to save early is one of the biggest regrets people preparing for or in retirement have. This is one of those hindsight gems referred to earlier.

If possible, before you receive your first paycheck and start finding ways to spend your money, set up automatically deducted contributions into a retirement account so you never even see it in your checking or savings account. That way, you won’t miss it.

Public school employees can make automatic contributions into a 403(b). It’s like the 401(k) in the private sector. If your employer offers an employer match, take it. A match is free money and it can help you build up your savings faster.

A Roth IRA is also a great option for saving. Roth contributions are after-tax, meaning you pay your taxes on it now but qualified withdrawals later on, including your earnings, will be tax free.


Some experts suggest that by the time you reach 30, you should have 0.5x your salary in retirement savings. (T. Rowe Price)


Cut the cord

It’s nice to have the support of loving parents, but every parent’s dream is to launch children that are well adjusted, happy, and self-sufficient. Your 20s are the years to build your independence and get off your parents’ payroll.

Without a doubt, it’s a challenging transition, but there is a huge sense of personal pride in being able to pay for expenses and work toward goals that are important to you.

The most critical part of transitioning to independence is looking ahead and breaking down the future into manageable pieces.

"My transition was gradual. My parents were able to support me in my education, but I was also prepared to take on additional financial responsibility. I made goals for how much I was going to pay for myself and I considered the options (work, scholarships) for how to achieve those goals. It was then that I learned to operate on both a short-term and long-term budget.

"At this point, I am pretty independent financially, but my parents help me out in countless other ways."

Level up

Be very proactive and plan ahead. You don’t have to be a certain age or at a certain place in your life to plan for your financial future. Establish goals, get organized, and seek help if you need it.

"This summer, I scheduled a financial planning session with Laura at Member Benefits. I didn’t really have any concerns. I felt like I was doing well, but I also didn’t really understand exactly where my money was. I just knew I was doing something positive. I had a lot of 'ah-ha!' moments just in that one-hour meeting. It was empowering. Now I know what my money is doing and how my investment is tailored to fit me and my profile.

"For people under 30, it’s just this big, scary topic that we don’t want to address, but now I understand it. I can talk the talk."

1017 emily youtube

EDUCATOR TO EDUCATOR

Watch Emily Piehl’s "Hit the Ground Running" video in our Educator to Educator video library on YouTube.