Major Money Milestones to Accomplish in Your 30s

Your 30s are a critical decade for your money. The habits you build and the milestones you hit right now will determine whether you're coasting into your 40s or scrambling to catch up. In this video, I'm going to share the exact milestones to hit in your 30s to set yourself up for a rich life. Milestone one you've paid off all high interest debt. Paying off your debt, especially high interest debt like a credit card, or will give you an instant and big return. Let me put it this way. If I could make 27% in the stock market, I would be investing every single penny I had. The problem is that when you're paying 27% interest on your credit cards, you are losing a tremendous amount of money. Not only are you paying interest on your debt to the credit card company every month, you're losing out on years of investing and actually making money. So pay off the debt. Pay off. Make a plan. You should know the exact month and year you will be debt free. To help you figure out your debt payoff plan, I created a debt payoff calculator that'll show you exactly how long it will take you to eliminate your debt. I'll link it for you in the below. Milestone 2. You've saved a six month emergency fund. Now, most emergency fund Recommendations are for 3 months of your bare minimum expenses. But but a major milestone is having six months saved. Why? You never want to be in the position where your back is against the financial wall. That means if you get laid off, if you have a sick or aging parent, there can be major expenses you didn't anticipate. And having three months saved is great, but it doesn't always give you a lot of wiggle room. If you have a six month emergency fund, you'll be prepared in case something more extreme happens like a job loss. And one more thing, the older you get, the more expenses you are likely to have. That is why I would encourage you to think bigger about your emergency fund. Now to figure out how much you'll need for six months, tally up your basic expenses like rent, transportation, groceries, bills and debt payments. You can do this easily by downloading my conscious spending plan, which I'll link in the description below. All you have to do is put your numbers in and then you will automatically see how much you need each month. Aim for saving six months of that. For example, if you spend $3,500 every month on your fixed costs, your emergency savings goal would be 3,500 times six equals 21,000. Yes, it'll take a while to save up six months of an emergency fund. That is why you should be working towards this goal every single month, automatically putting money into your emergency fund. Now, I usually recommend 5 to 10% of your paycheck go into savings. But in your 30s I want to encourage you and challenge you to increase your savings rate to 10%. That means you can save more towards your six month emergency fund and you can save for other goals that you have. Milestone 3. You consistently invest 10% or more of your salary. When you're just starting out in your career, investing 10% of your paycheck can seem difficult. It can even be impossible. But as you start to make more in your 30s, you should be investing more, ideally 10 plus percent of your paycheck minimum. And this can be a combination of what you contribute to your 401k and other investment accounts like a Roth IRA. For example, if you're contributing 5% to your 401k, then contribute 5% to your Roth. And for all the financial freaks out there who are about to tell me this is confusing, it's pre tax versus post tax. It's not that confusing. Just approximate it. The point is not the precision. The point is to get the number bigger. And don't stop there. The more you invest, the better. That is because the real wealth is created in investing. So every year in December, set a calendar reminder to increase your investment rate by 1%. If you haven't yet maxed out your Roth IRA, increase it there. Once you've contributed the max to your Roth, go back to your 401k, increase it by 1% there and keep going. You can do it taxable account. Here's the key. Stop increasing your contributions only when you are well ahead of your retirement goal. For example, if you need $3 million to retire, you would be on track to coast to $3.5 million. That's another little secret. You always want to set a goal bigger than what you need to win. Because inevitably in life it's not always going to go right. If you want to know how close you are to your retirement goals and to understand how investing is going to affect your money, use my new investment calculator linked in the Description below. Milestone 4. You have monthly money meetings with your partner. This meeting, which is on the calendar every single month, gives you and your partner the time and space to talk about your finances. And honestly, this check in works just as well if you are single throughout the month. If you have random questions about your finances that are not time sensitive, you Just drop it in the agenda. I know it's weird to have an agenda. Ooh, that's so weird. That's so corporate, Ramit. You know what's actually weird? Going the next 45 years of your life arguing about the price of alfalfa. Instead of using a simple free Google Doc where both of you participate and run a business together, the business of running your household. Here's how to structure your monthly money meeting. Choose a calm environment, minimize distractions as much as possible and set a timer. Keep the meeting to no more than 60 minutes. Here's the agenda. Start with a compliment. I really appreciate that you picked that amazing restaurant for my birthday last week. Next, follow up on any open items from last month. I know I was going to try to cut our grocery bill by $100, but I wasn't able to do it. I only dropped it by 40. Here's what I'm going to do next month, then review your conscious spending plan. How are we doing? How are we working according to our numbers? Do we need to tweak anything? Look at your named savings accounts, for example. Wow. We're already 30% of the way to that amazing Tahiti vacation. Talk over anything else in your shared agenda. Hey, what was this $201 charge transferred from our checking account? I can't figure it out. Then assign any tasks by name. Be specific. Who owns it? What's the next step? What's the deadline? For example, we should link our joint and individual accounts together. Can you do it tomorrow night after work? Then give yourselves a Rich life moment to look forward to. Hey, let's go to that new Thai place on Friday with Cam and Nikki. I'll book the reservations and always end with a compliment. A good compliment is specific about the meeting and it can include how your partner made you feel, something you noticed, even the fact that they were present during the meeting. You know, that was tough, but we did it. And next month is going to be even better. I love you. Don't worry if this feels awkward or weird at first. It's going to be amazing when you see how much you are automatically saving and investing. And more importantly, you are going to love the feelings of connection because you're doing this together. Milestone 5. You've saved a buffer for each of your larger purchases. When it comes to large purchases, the number one mistake, people. Well, the number one mistake is some of you buy freaking Jeep Grand Cherokees and Ford, some of the worst vehicles on earth. But the next mistake people make is that they do not account for Phantom costs. Phantom costs are the invisible costs that are not obvious from the sticker price. If you don't plan for phantom costs, you may find yourself making major purchases and wondering, where's all my money going? Because these unexpected expenses have suddenly come out of left field. An example would be if you buy a house, there's going to be maintenance and repairs. You simply did not account for transaction costs, etc. This is also true on vacation. On vacation, you might need to take an unplanned taxi ride. Okay, you got to factor that in as well. But how do you know how much to save for a buffer if you don't even know what these phantom costs will be? Well, the best way to do it is to save a percentage of what you expect to spend. For example, if I'm going on vacation and it says that it's going to cost $1,000, I expect it to cost $1,500. If I'm planning a wedding and it looks like it's going to cost $30,000, I expect it to cost 6, $60,000. As you can see, I'm doing 150% for vacations, 200% for weddings. You can adjust the numbers for your own situation, but the key here is to plan for phantom costs and to use percentages. Next up, milestone six. But before I get to that, make sure you hit that subscribe button and turn on notifications so that you don't miss any of my new videos on building wealth. All right, milestone six. You donate 1% of your salary now. I love this one. One of the most important parts of a rich life is to live outside the spreadsheet, not just sitting there calculating Monte Carlo calculation for the rest of your life. No, it's relationships, it's new experiences, it's trying new foods and giving back. If you've hit every other milestone in this video, you've moved past the basics. And this means it's time to elevate your goals and beyond the day to day. I want you to think bigger, not smaller. So many people are consumed with the minutiae of money that they don't zoom out and think about living a rich life. And I believe that part of living a rich life is giving back to the community that's helped you flourish. Now, to make giving back an important automatic part of your rich life, first, it doesn't have to be some astronomical number. It can be 1% of your salary, which is highly meaningful. Or if you can't do 1%, do half a percent. But here are some ideas 1. You can set up an automatic donation to a charity that supports a cause you care about. You can leave very large tips every time you eat out. You can purchase school supplies for kids in need. All I can tell you is that when I have spent money on those in need, those are the times that I remember far more than buying a new shirt or going out to see a movie or a restaurant. Now, whether it is your time or your money, I want you to incorporate giving back into your rich life. Milestone 7. You've completed the 10 year bucket list Exercise One of my favorite ways to design your rich life is the ten Year Bucket List with a twist. I'm going to show you how to create a fun list and then you're actually going to make one of these happen. Let's do it right now. The great thing is you can do this with a partner or you can do it solo. Ask yourself, what do I want to do in the next 10 years that would make the decade incredibly meaningful and rich? And dream big. Think once in a lifetime trip or special car or incredible annual family reunion. If one of you wrote buy a new Uniqlo sweatshirt, you really need to dream bigger now. When I sat down with my wife to do this exercise, one of my items was Write a book in a beautiful hotel. I knew that in the next 10 years I would write a book and I love hotels and I actually made that dream happen. I wrote my new book, Money for Couples in my favorite hotel in Kyoto, Japan. I'm doing a little writing outside. There's nobody around and just have a very leisurely day as I'm writing. So let me show you how to do the 10 year bucket list. Exercise yourself. Write down five items on your 10 year bucket list. This will take about 10 minutes. If you're doing this exercise with a partner, take turns sharing your ideas one at a time. And remember, stay curious, have fun, Keep the tone playful. You might even discover something you didn't know about your partner's dreams. Pick one meaningful idea. This should take about 10 minutes. The idea should be exciting and inspiring to both of you if you're doing this with a partner and it should feel big, maybe even uncomfortably big, but also achievable. Schedule it. This should take about three minutes. Choose when you want to do this. Be specific down to the month and year. If you're thinking of taking a vacation with kids, for example, you probably know it's going to be during a school break and if you're not sure when, use your best judgment. But Pick a month and year. Estimate the cost. 10 minutes. We're looking for rough calculations here, so don't get too hung up on the exact amount. And here's a pro tip. Build in a buffer. For example, if you're planning a big trip, jot down the major expenses like airfare, hotel, food, and shopping, and then add 50% to the total. Build the system to ensure that your bucket list item happens for sure. This will take 10 minutes. You know what you want to do, you know when you want to do it, and you know how much it costs. Now, let's put it all together. Let me show you an example. We want to take a family vacation to Argentina. We know that we want to do it five years from now or 60 months from now. We estimate that it's going to cost $10,000, which means if we divide 10,000 by 60, we need to save $167 per month. Now, if your monthly number looks too high, don't worry, you have options. You can stretch out the timeline by a year, you can cut back on other expenses, or you can simply shrink the scope of your idea from 10,000 to 8,000. What I love about this is you're taking real steps to make your rich life happen, and it's simply a matter of time. Now, because of the system you built where you are automatically saving money in an account, you know that every single month, like a video game, you are getting closer to winning. And there you have it. Seven money milestones to hit in your 30s. To make sure you have the money to actually hit each one and retire with more money than you could have ever imagined, check out my complete playbook here.