Financial Decisions You Must Make in your 20’s and 30’s

Your 20’s and 30’s are the most important financial years of your life. The financial decisions you make over these years will determine what your life will look like later. If you are in your 20’s or 30’s, here are four financial actions you should be doing right now.

1. Start Saving 15 Percent ASAP

I Know! Saving in your 20’s and 30’s is hard. How can you save when you barely have enough money to pay all of your expenses? Saving doesn’t get easier later. You will never feel like you have extra money to save. You just have to buckle down and find a way to get it done now. When you save, you are writing your future self a paycheck that will be ten times the amount that you save now. Saving earlier in your adult life is exponentially better than getting started later.

Check out this scenario:

  • If you save $2000 per year from starting when you are 25 and earn 8% interest, you will have $560,000 at age 65.
  • If you set aside this same amount starting when you are 35 and earn 8% interest, you will have $245,000 at age 65. – less than half of what you would have if you had started at 25.

When it comes to saving, there is simply no better friend to you than time.

Start saving now and aim to save 15% of your income. Reorganize your financial life to make this happen. Failing to save in your 20’s, and 30’s will put you in a bad financial situation later. Don’t be the 60-year-old who is scrambling to try to figure out how you will survive financially for the rest of your life.

Start as soon as possible and save 15% of your income.

2. Set Up A Retirement Savings Plan

Now that you have reorganized your life to save, you need a place to put your savings. Here are three options:

Option 1 – For Pastors and Churches: – Call Guidestone and set up a 403B plan. GuideStone specializes in providing retirement, investment, and insurance services to churches and Christian organizations. Guidestone is a reliable investment option – I have an account with them. If you are not sure where to invest within Guidestone, Choose this fund until you have learned more about asset allocation.

Option 2  – For Anyone: Set up a 403B (Churches) or IRA with Vanguard. Vanguard is the largest and one of the most successful mutual fund companies in the world.  Just getting started and not sure where to invest? You will eventually want to learn more about asset allocation. But for now, choose a Target Retirement Date Fund based on your age or the Vanguard Total Stock Market Index Fund.

Option 3 – For More Advanced Investors: Consider a Platform like Future Advisor, which uses Modern Portfolio Theory. (I use Future Advisor and manage my portfolio rather than paying them .5% for premium service)

3. Set up a Retirement Matching Plan

Many employers match an employee’s retirement contributions up to a particular percentage. If you already work in an organization that does this, take advantage of the opportunity and make sure to contribute at least as much as your employer matches. Churches can also establish these matching plans in order to help pastors save. I would strongly encourage every church to set this up for its pastors. If you are the pastor, go discuss this with the people who can make it happen. Get it in the budget. I suggest that churches aim to match up to 7.5% of a pastor’s contributions, which will get a pastor to the 15% savings mark.

Related: 6 Financial Mistakes that Pastors Make

4. Get a Good Clergy Tax Professional

I have said this before and will it again. Stop using Turbo Tax, or your uncle, or some guy in your church as your tax guy. The day I stopped doing my own taxes was the day that I began saving a ton of money. A tax professional that specializes in clergy tax issues will save you a lot of money by maximizing benefits that are available to you. Keep in mind, you will have to spend money in order to get this done. I use Clergy Advantage and pay them a lot more than the local H&R block, but the money spent is well worth it.


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Posted by Brian Howard

My focus is to help YOU move forward one step at a time. I write about church excellence, personal productivity, and family leadership. I coach leaders, start churches, and help organizations break growth barriers. My goal is to draw on this experience to help YOU move forward in life, leadership, and productivity.

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