Finance Knowledge Every 30 Year Old Needs To Know - WiseGravy

Finance Knowledge Every 30 Year Old Needs To Know

 

By: Ian Golightly MBA

 

If finances were never discussed with you by your parents, then most likely, finances never became a priority. If you love money, then understanding your finances will be necessary. Luckily with the internet, there is so much information out there. When I was younger, the internet was used for gaming or downloading ‘free’ music. Now you can find almost anything on the internet and also learn about nearly anything that you want. To learn about finance, you don’t need to have your parent initiate that conversation.

Do I wish my parents ever talked about finance? Absolutely.

Did they? No.

Am I okay with it? Yes.

Finance is essential, and it is critical to know the bare minimum to build a financial foundation.  So if you’re 30 and below, here are some critical principles to understand.

 

Pay Of Debt Is High Priority:

 

First of all, debt is debt, but not all debt should be treated the same. As a rule of thumb, you should pay off debt with the highest interest. Whether you’ll be paying off student debt, mortgage, car loan, or credit cards, it’s important to prioritize which one will be paid off first. Paying off debt will help start to build a finance stress-free life.

If you ignore paying off debt, you’ll be giving your hard-earned money away by this thing called interest.

 

Monthly Budget Is A Road Map To Your Wealth

 

Creating a budget is never fun, and it is time-consuming. Understanding how much money is coming in will help determine how much should be going out. You’ll never want more coming out of the bank than what’s coming in. My rule of thumb is to make sure all of the bills are covered. Secondly, make sure excess money is invested after sacking a small portion into a savings account only for emergencies.

I’m not a fan of savings accounts because it is just money that is just sitting there. Being prepared for an emergency is a must, and it’s the only reason I have a savings account.

 

Overcome Impulse Spending

 

I’m guilty on this one from time to time, and it’s okay for you too. I do believe sometimes; you need to award yourself for achieving your milestones. So impulse spending is okay once in a while. However, chronic impulse spending is something that needs to be overcome. It’s easy to go to Target or Walmart and buy things that are ‘fun’ to have and is not considered a need.

Because inflation and prices are increasing, did you know the average spend of $29 per day for a year is equal to $10,000?

 

Distinguishing Luxury From Need

 

Over the years, brands have done an excellent job mastering the skills of psychology marketing.  For consumers, that can be dangerous because these marketing ploys can make consumers feel like their products are a need when the reality is a want. Most of the time, these purchases do not benefit or support financial goals. One vital skill set to have is to be able to distinguish between a luxurious want and a need.

Once you’re able to distinguish non-needed purchases, keep track of how much you are saving. Sack a little bit of money for an emergency fund and then start to diversify your money. Having your money sit around does no good, but this is an excellent opportunity to let your money work for you.

 

Emergency Fund First

 

A good rule of thumb is to have an emergency fund that can keep you afloat for 6-months. Once you have 6-months saved up, continue to save a small percentage if a real emergency occurs like surgery or a long-term illness. If you can have 6-months of funds saved up, that money will be handy if you lose your job or you’re thinking about quitting and starting your own business. One benefit of having an emergency fund is that it will keep you mentally stable since it will be a safety net for unknown times.

 

Save Up For A Home:

 

I remember saving up for a home in my younger 20s and later purchasing my first home at the age of 27. My first home was by far my best asset that gave me the greatest return. After living in the home for 4-years, I made an $80,000 profit, which had allowed me to buy a home that was double the size.

Homeownership is not for everyone, but it wouldn’t hurt to start saving as early as possible if the thought comes to your mind.

There are a handful of other financial foundations that are important to know. However, the principles in this article are core principles that can help jump-start you to a significant finance stress-free life. Understanding and implementing these principles as early as possible is critical. I was fortunate to learn about money early on because I never had it. Being raised in poverty motivated me to learn about money and make it part of my craft. So to pay it forward, I’ve shared some knowledge that I’ve learned throughout the years.