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Six steps to take before you're 30

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Take action now and enter your thirties on a firm financial footing!


I'm just a couple of months away from the big 3-0, and it's got me thinking about all the things I haven't yet done. You know the sort - climbing Kilimanjaro, learning Portuguese, reading Crime and Punishment and working out how to tie a really good knot...

Anyway, I've also been assessing my financial situation. By the time you reach 30, there are certain money matters you should have taken in hand, or at least had a crack at. Let's just say I'm getting there.

If your fourth decade is breathing down your neck, try to make sure you've taken the following eight steps!

1. Take control

As a student, I couldn't have told you what my financial situation was. I knew I didn't have much cash and lived permanently in my overdraft - but I was definitely fuzzy on the details. Sadly, this remained the case throughout my 20s.

Burying your head in the sand is dangerous, both literally and financially! If you're ever going to get onto a firm footing, you need to take responsibility for your finances, and that means working out exactly how much you owe, and how you're going to pay it back.

First, start a spending diary, noting down exactly how much you're spending on what. You might be surprised! And use a Statement of Affairs calculator to get a clear idea of your overall financial situation.

Find out the exact rate of interest you're paying on each of your debts. This will help you clear them more quickly, through a useful way of prioritising your repayments, known as snowballing.

Another good way to take control of your finances is to register for online banking here at lovemoney.com. Add the details of all your online bank and credit card accounts, and you'll be able to keep track of all your financial transactions in one place.

2. Stop living within other people's means

Many of my university chums are now working as lawyers, doctors and (ahem) bankers, and are earning six-figure sums. As a freelance journalist, I am, well, not.

I'm very happy with the choices I've made in life, but I'm also aware that these choices mean I can't always match their displays of financial generosity. I can't spend as much on gifts or meals out, and I can't hope to live in the same sort of houses, or take holidays to the Maldives.

By the time you hit 30, you need to be comfortable with your choices and live within your own means, not other people's. At the risk of sounding a bit 'Oprah', real mates will understand, and they won't judge you.

3. Ditch false friends

By the time you hit 30, the chances are you'll have been dealing with financial providers for at least ten years. For many people, that's ten years spent learning - the hard way - that banks are not your friends.

Loyalty doesn't pay, and trusting financial providers could mean they find 101 ways to legally rip you off. Harsh but true.

So, shop around and do your own research. When I finally got my head around this in my mid-20s, I was amazed at how much money I saved!

4. Build up a rainy day fund

Ideally, you should start saving well before you reach 30. In the current economic climate, we should all have three to six months' income squirreled away already, to deal with financial emergencies like redundancy.

Of course, if wishes were horses, beggars would ride. In reality, many people in their 20s are still struggling to pay off several thousand pounds of university debt, and have no savings at all.

However, it really is important to start saving as soon as possible. I've been reliably informed that one's thirties tend to bring with them children, cats and all sorts of other dependants, looking to you for a secure financial future.

Adopt our goal Build up your savings for help on how to take the first steps, or take out an ISA - essentially a tax-free savings account. You can save up to £3,600 in a cash ISA each financial year (£5,100 if you're aged 50 or over by 5th April 2010).

Read The top 10 cash ISAs for 2010 to find out more.

5. Understand your financial associations

I know several people who've been left in a pickle by unfortunate financial associations. I don't mean through illegal activity or dodgy financial dealings - but because of relationships that went wrong.

When a 'financial association' occurs, two people's credit ratings become linked. That means your spendthrift partner's habits could seriously impact on your financial future.

Many people think a financial association can only occur through marriage. In fact, you'll become financially associated when you take out credit together - regardless of whether or not you're co-habiting. Examples include taking out a joint account together, or being jointly responsible for a mortgage.

As you get older, you're likely to take on greater financial responsibilities, and it's important your credit rating is as healthy as possible.

So, by the time you've hit 30, make sure you've cut any forgotten financial ties with unfortunate exes! Read Protect your finances from your ex to find out more.

6. Start a pension

Retirement may seem like an awful long way away, but ideally, you should start saving for a pension in your 20s. Starting early will mean the miracle of compounding will really work to your advantage, even if you're only able to contribute a very small amount every month.

Watch our video - Start your pension early - to find out more. And if you're not sure what your options are, read How to pick your first pension.

Good luck. I'll let you know how I'm getting on when I reach forty!

Get help from lovemoney.com

If you need a bit of help managing money, you've come to the right place.

First, adopt this goal: Manage on a small budget

Next, watch this video: Slash your credit card debt in four easy steps

Then why not have a wander over to Q&A and ask other lovemoney.com members for hints and tips about what worked best for them?

More: The five biggest money mistakes you can make | I can't survive until payday!

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