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Steps to reaching financial security by the age of 30

Thinking about your financial future when you just stepped into adulthood can be terrifying. Or it may seem like a problem that can be solved in the future.

But the time between your 20s and 30s is fleeting, and if you do not plan now, you’ll end up playing catch-up in the future, which can be financially draining. Financial freedom involves making changes and sacrifices now so that your future self can thank you – giving you the financial independence to handle any financial obstacle that may come your way.

Below, we have tips you can use to reach your personal money goals by the age of 30.

Be savvy when having fun

When people hear about financing and achieving financial independence at a young age, they always assume it means they cannot have fun. But, this is the furthest thing from the truth. You can save and still enjoy your youth, plus when you know that you are keeping your personal finances in check, it makes having fun even better. So do not deprive yourself of having a great time with loved ones; instead, budget carefully.

Creating a budget is an effective way to plan out your life and know where your money is going. Plan for activities in advance and save accordingly through the year so that you can enjoy your life while also planning for your future. When you go out, always have a set budget that you stick to and always be on the lookout for affordable deals. Whether it’s going out for lunch, entertainment, clothing shopping or buying a big purchase such as a car, always look for ways to save money.

Have a plan for everything

Saving without a plan can be difficult, and it can lead to you not meeting your saving goals. One smart saving tip is to know what you are saving towards. Having a plan for where your savings are going and when you need to reach it is a great way to achieve your goals. For example, if you want to bulk up your emergency fund, then you need to have in mind an amount that you want to save as well as a time frame. That way, you’ll feel a sort of pressure to achieve that goal either sooner or by your chosen end date.

Also, make sure your friends and family are aware of your relationship with money and how you want to plan for the future. Ask them to tell you about upcoming birthday celebrations, anniversaries or engagements in advance so that you can plan your money around it. Or you can create a sinking fund so that you can pre-save for any big celebrations. A sinking fund is when you allocate a certain amount of money each month to help give you a buffer for certain events. Those can include Christmas, birthdays, anniversaries, Valentine’s Day or any unforeseen financial obligations you may have throughout the year. By doing that, you won’t need to worry about budgeting for an expense only once it arises.

Invest in yourself

As you immerse yourself in the working world, you will begin to see that you need more than your qualification. The job market will always be a competitive space, and with more people obtaining a high level of education, you will need something that will set you apart from the rest. The only way to do that is by investing in yourself. This can be achieved through online courses, reading and watching informative content, or taking a part-time class. By doing this, you are gaining more knowledge in your current career path or paving the way for a new one.

While there are free online courses, you might need to pay for some depending on how much you want to advance your knowledge. And that can mean you’ll need money to cover that expense. While debt may be something you’re wary of taking on, a personal loan in South Africa can be a feasible way to invest in your future. Remember that not all debt is bad, more so if it is centred towards investing in yourself or gaining assets to your name.

Stop impulse buying

Impulse buying is one of the easiest ways to waste money. And while it might make sense at the moment, you always need to ask yourself these two questions:

  • Do I need this item now?
  • Do I have the money to pay for this right now? (If you’re using your credit card or savings decide against purchasing it until you have the money.)

Try to practise delayed gratification and see if you truly needed that item or if it was only a need at that moment. If you keep thinking about it and you have money to purchase it (not from your credit card or savings account), then you can make the purchase.

Pay off your debt

Large amounts of debt can stop you from achieving financial freedom as most of your money goes towards paying off interest and debt. This is especially the case if you have high debt amounts on your store or credit card because they have higher interest rates than other loans. For you to reach your financial goals, you need to have money to attain them. And if you have large amounts of money going towards debt, it could be difficult to do so.

Write down all your debts amounts and calculate how much you owe and start working towards paying it off. If you have a large balance to cover and it’s hard to keep track of all of them, then consolidating your debt may be the most effective way to pay off debt. You can look at personal loan repayment calculators in South Africa to see how much you would need to pay each month for your repayment terms. If you find that you are paying less, then a loan may be the best way to go. It can save you money as it may lower your monthly instalment, and you’ll get a lower interest rate to pay off on one loan compared to paying interest on each credit card or store account.

So sit down with your budget, check the number of debts you have and use a personal loan affordability calculator to see if it’s the best option for you.

Have multiple streams of income

With the cost of living so high, many people struggle to reach their short and long term financial goals. But one way to combat that is to have multiple streams of income. Side hustles have been around for years, but now more than ever, many people are starting side hustles in the digital space. If you have a talent or skill, it’s time to utilise it. Even a hobby can become a stream of income; that way, you can have multiple streams that can help you save, pay off debt or live comfortably while saving money for your future.

Final thoughts

Planning for your future self may seem like a lot of work, especially when you’re in your 20s and have recently started working. But, now is the perfect time to start as you still have little financial obligations you need to worry about. Money is one of the leading causes of stress, so the choices you make now will allow you to live comfortably and stress-free in the future with little money worries.