Published on October 16th, 20180
3 Money Questions You Should Be Able To Answer At Age 30
If you are exiting your 20s, you may be gallantly resisting the urge to “adult” and actually pay attention to your finances. But it’s time to get serious, people.
You don’t need to obsess over every detail of your money just because you are entering your fourth decade of life, but there are some key things you should have a handle on if you want to achieve financial freedom and retire on time.
Let’s examine these questions you should be able to answer by the time you turn 30.
1. What is your net worth?
Your net worth is the total sum of your assets minus your debts. By age 30, you should be focused on building that net worth to a healthy sum. This means boosting your income, investing well, and keeping debt to a low level.
It means knowing how much you owe. There’s no magic number for what your net worth should be at this stage, but it should definitely be in positive territory. If you have a negative net worth, work to reduce your debt load and start saving money more aggressively.
2. What are you invested in?
By age 30, you should be investing as much money you can in stocks, with the intention of watching that money grow for the next three decades or more until you retire. Starting at age 30 will give you plenty of time to build a sizable nest egg, if you invest well.
At this stage, you may be throwing your money into whatever investments are offered by your employer’s retirement plan. But you should take time to know precisely how your money is being invested.
3. Are you on track to retire comfortably?
Retirement may be decades off, but it’s still crucial to get a sense of whether you’re saving enough now to ultimately retire when you want to. It’s been said that by age 30, you should have half your income saved. This may seem like a steep total in an era of high housing costs and student loans, but it’s achievable if you maintain good savings discipline. Calculate how much you’ll have saved by age 50, then 55, then 60. If you’re behind your target, it may be important to bump up your current rate of saving.