10 Financial Tasks to Tackle Before 30 (So You Can Afford to Start Your Actual Bucket List!)
If there is one thing that gets me riled up, it is bucket lists. I recently was dragged to persuaded to visit a bookstore by a friend. Right under a “Books You Should Be Reading” sign was a book with 100 things you should do before [insert a certain age].
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Since I was around [insert a certain age], I took a look.
I was appalled.
- Was owning a home listed? No.
- Was hitting $10k+ in savings listed? No.
- Was using a credit card to earn points listed? No.
Guess what was?
- Rent a convertible ($529.93 for two days in Denver)
- Go on a shopping spree ($$$)
- Attend Coachella (GA passes start at $429, and this does not cover travel, hotel, and car)
Let me address the facepalm by saying there is nothing inherently bad with a bucket list. The point I want to make is that you should achieve financial goals first so you can tick items off your bucket list without hurting yourself financially.
To provide background, my area of "expertise" is being frugal and saving money. Last year, I saved over 50% of my post-tax income and have consistently saved at least 33% of my income since the start of my career. Side note: I do not invest in real estate yet, but I will be a first-time landlord in the next six months. That being said, I am frugal. I'm frugal with food, clothes, cars, and general living expenses.
Now, getting back to bucket lists: When it comes time to check an item off my bucket list, it will not—I repeat, will not—impact my financial success. In fact, I’m counting on my financial success to support my bucket list.
What I propose today is that we create a new bucket list—a financial bucket list that isn’t unattainable, that doesn’t require huge financial expenses that you will never recoup, and that puts you on track for a lifetime of success.
10 Bucket List Items to Complete Before [Insert Certain Age Here]
1. Save any raises or bonuses you receive.
Learn to live with less and to never count on a raise or a bonus. Learn how to do this early, and make it a habit to rely on the salary you have now. This way, everything else you earn and receive can help propel you towards financial security. Bonuses and raises will act as an accelerator instead of money that has already been spent.
For example, I have student loans from my MBA. My money makes a better return in the stock market than the interest I pay on my loans. So, for the time being, I pay my loan minimums. Once a year, I'll take a bonus or extra money I've saved and put a lump sum towards my loans. I do this because that extra money isn't money I've spent or plan to spend, and I do want to pay off my loans in the next two years.
2. Set up automatic investing.
There are many ways to do this! You can round your spending up to the nearest dollar and invest the difference, you can manually pull from your paycheck and invest, and you can set up automatic withdrawals, among other options. I selected these three, as they seem more traditional examples.
I used to subscribe to saving my money in a savings account that earns no interest, taking out a lump sum once a year to invest. Let me tell you, that does nothing to help accelerate your savings. I was missing out on months of return on investing in the stock market.
I personally prefer an automatic withdrawal every Monday from my checking account that goes straight into my index funds. Why? Because it plays the market as it increases and decreases. Also, I do not have to think about it. Vanguard sends me a transaction success email, and I’m done. I will say, in the past couple weeks, I’ve cut my weekly investments in half so that I can hoard some cash because a good market cannot last forever. Note: This is personal preference.
Related: Life Hacking in Pursuit of Financial Freedom: How I Add $1,500+/Mo to My Income
3. Establish how you want to pay for your retirement.
If you are reading this and it’s not your first time on the BiggerPockets blog, you know retirement doesn’t have to rely on a 401k. And you also know the decision on how and when you retire is entirely up to you and your risk tolerance.
Personally, I never want to rely on my 401k. I want more of a say in how my money makes me money, and I want access to my money, for the most part. I max out my Roth IRA and invest heavily in the stock market. Additionally, I’m focusing on rental properties for passive income in the next year.
4. Put money into your preferred retirement account and make sure it gets (a good) interest.
This is a supplement to #3. I’ve learned firsthand that a company-supplied 401K does necessarily perform.
Over a similar five-year period, my significant other has put less into his 401K, and it’s currently valued at over $10k more than mine as of the end of Q2 2018. We were casually comparing past company 401K performances one night about three year ago, and when I learned my 401k was not performing as well as his, it helped solidify my decision to take a more hands-on approach to my retirement. Please note: This is not BiggerPockets’ 401k, and we contributed to these 401Ks over roughly the same five years. This is just one of many ways to prepare for retirement and not one I am counting on.
5. Buy a car outright.
Just do it. You are not saving money in the long run with a lease or a brand-new car. A car is a depreciating asset and requires yearly maintenance. I'm not making the case for ditching a car, but you should think outside the box when it comes to purchasing one. Do not keep up with the Joneses.
For example, after cruising around in a 1999 Chrysler Cirrus for 10 years, a car that was paid off by my parents years ago, it eventually died. Instead of buying a new car, I purchased a 2003 Toyota 4Runner for $7,000 in cash. Even though I have spent ~$6,000 on work for the car (over the last three years) and ~$50 for synthetic oil changes every four months, plus gas, this is still cheaper than “buying” making payments on a new car. I simply budget $100/month in the summer and $150/month in the winter for my vehicle. Additionally, my lifestyle heavily incorporates skiing, and this car allows me to get to the mountains every weekend.
6. Find at least one friend and/or a partner who you can talk to about money.
I grew up thinking money was not something you talked about. I would seek out advice from books and online articles instead of speaking to my girlfriends or significant others. However, on a bachelorette trip to Austin, I learned a valuable lesson.
Late one night, one of my (now) best friends and I were talking, and the conversation turned towards investing. She is an accountant, so this wasn’t a new subject to her. While it felt uncomfortable at first, I learned so much from one late-night conversation. I started to make an effort after that to talk about finances with my girlfriends who are equally interested in the topic and to discuss it regularly in my household. Even with a job at BiggerPockets, where money is touched on regularly, these conversations teach me something new every time.
7. Figure out how to lower household expenses.
I now look at household expenses like a car payment. The cost of using paper towels, laundry detergent, hand soap, and other items can be expensive—especially if you want to keep up with the Joneses and have expensive, good-smelling soap or candles.
As I mentioned, I’m frugal. I was already buying, for the most part, store brand products, but this BiggerPockets Money Podcast episode helped me save another ~$70/year, plus time spent on household items, by suggesting I sign up for scheduled deliveries. And I’m not stopping there. I’m always on the lookout for a good deal. Colgate toothpaste on sale for $1 for up to 10? Done. I now have enough toothpaste to last me for the next five years. Seriously.
8. Learn how to use a credit card in your favor.
Travel hack. Points hack. Rebel against the banks!
This is a somewhat new topic for me. Have I opened a Southwest credit card years ago and flown for free for a year? Yes. Did I know you could leverage your spending to get a companion pass? No.
There are so many places to start learning about this topic, including the BiggerPockets Money Podcast. As long as you are paying off your entire credit card bill each month, you should learn how to take advantage of being a responsible consumer. I would suggest Travel Miles 101 as good place to start. Oh, and if you are worried about your credit score, do the research before you regurgitate the thought that “opening multiple credit cards will hurt your credit score.” Hint: It won’t if you do it right.
9. Examine how much you spend on groceries and restaurants.
When I first lived on my own, I was spending $100 a week on groceries. This was ridiculous. For a household of two, I now spend between $45 and $80 a week, and this is for breakfast, lunch, and dinner every single day. Spending $100/week = $5,200/year, while $40/person per week = $2,080/year. Obviously, cutting down recouped a lot of money for me—and I do eat healthy foods.
I suggest using Mint to track your spending on food and restaurants. Then look at what you can cut. Your first stop should be to cut eating out for lunch and then critically think through eating out for dinners. “I’m lazy” or “I’m hungry when I get home and don’t want to cook” are not excuses. If you think they are, let me reframe this for you: Would you accept those excuses at work? Hold yourself to a higher standard—because it saves you money. And a lot of it!
It’s not that much more work to prepare meals or cook in bulk a couple nights a week. If you need inspiration, visit Pinterest and search “easy recipes.” There are hundreds of thousands of people who have done the challenging work for you. You just need to click, make a grocery list, go grocery shopping, and cook. Or if you use something like Click-List from King Soopers a.k.a. Kroger, then you just need to pick up your groceries and cook.
10. Challenge yourself to do something that benefits you financially each week.
I got this from the guys at Choosing FI! Each week, Brad and Jonathan ask their Facebook group what one thing they did that week that benefitted them financially. I’ve found this to be so motivating!
Related: 12 Reasons You’re Poor
I used to try to do something to impact my finances once a year, and then it became once a month. Now, it’s weekly. Sometimes it’s that I didn’t impulse buy ice cream on Wednesday night, and other times it’s that I bought stock in a company I follow closely. And then sometimes it’s that I did nothing and the stock market increased. For me, I’ve found this to be a good reminder in my life to stay on top of my financials and keep my financial goals top of mind.
There are certainly a few items on this list I can check off, but most are works in progress. I’m OK with that.
Once I start checking these items off, my next step is tackling my non-financial bucket list—in a responsible manner, of course. In case you are wondering what that list looks like, here it is:
- Ski in Patagonia.
- Swim with a whale.
- Hit financial independence independently.
- Be the CEO of a company.
As you can tell, a few of these items are not financially responsible. Whose bucket list is financially responsible?! This is why I urge everyone to evaluate when and how to tackle these lists. I get it—Instagram is a window into lives that are bucket list-based, and that’s fantastic, as long as you have the money to support it and the mindset to live a financially-focused life.
That’s my two cents.
So now I want to ask you: What else should be on this list? What shouldn’t be on this list and why?