The 5 Financial Goals To Achieve In Your 20s

What's up you guys, it's Graham here. So, I have no idea how to start this video other than to say that I went down a bit of a rabbit hole the other day. You know, like when you come across something online and then for some reason, you open up another tab on the subject, and then another tab, and then another tab, and then another tab, and then you just keep going further and further down the endless cycle of the Internet until you inevitably just wind up watching cat videos? Yeah, me neither! But seriously, I came across an article that went over the financial milestones that everyone should reach by "insert image here."

Because I'm in my late 20s, I thought it would be fun to research what other 20-somethings should be on track to achieve, and I did that by going through at least a dozen articles which all mentioned things like pursuing a financially rewarding career, getting some term life insurance, purchasing a home, opening a checking account, buying your first car, and smashing the like button for the YouTube algorithm. Then, because I wasn’t really happy with any of those answers, I just felt like they were kind of lame—besides smashing the like button, of course, no offense!

So I started looking up more measurable goals like how much money you should have saved up by every age. Bankrate said that by the age of 30, you should aim to have sixty-six thousand dollars invested and ten to twenty thousand dollars saved as an emergency fund. In order to do that, assuming you started at the age of 22, you would need to invest four hundred and thirty-three dollars a month for eight years at an average of seven percent return. And there you go! Voilà! Sixty-six thousand dollars invested.

On top of that, you would have to be stashing away one to two hundred dollars a month additionally to build up that emergency fund over that period of time. But CNBC says on the other hand that in your 20s, you should aim to save twenty-five percent of your gross income so that by the age of thirty, you have the equivalent of one year's salary saved up. A lot of banks second this advice by saying that you should have one time your annual salary saved up by the age of thirty and then save fifteen percent of your income towards retirement.

Of course, I started looking up the average net worth of thirty-year-olds just so I could see how accurately this goal was being portrayed, and it did not look that good. Under thirty-five years old, the median net worth was just ten thousand two hundred dollars. If you take the median net worth of someone at the age of thirty, including student loan debt, you're looking at a negative nineteen hundred dollar net worth.

So, given all of these wild deviations between all the things you should be achieving by the age of thirty and how much money you should have, here are my top financial milestones everyone should work towards and achieve in their 20s. That way, by the time you're 30, you're gonna be sitting pretty comfy, or at the very least, you'll put yourself in a great financial position for the rest of your life if you could just get these five things down.

And this is what they are:

First, and the most reasonable goal that I think everyone should aim to achieve in their 20s is to get a credit score above 750. Now, for anyone who's not aware, your credit score is just a calculation that shows lenders how responsible you are in paying back the money that you owe. This could be something like credit cards, auto loans, student loans, mortgage payments, or anything else where you're buying something without your own money up front.

This term known as a credit score is basically just a grade that lenders will see anytime they determine how much money they will give you or at what interest rate. The score ranges anywhere from 350 at the very lowest to 850 at the very highest, with the best interest rates given to people with a score above 740. That means the higher the credit score you have, the less interest you will pay, which saves you more money and makes you that much more likely to get approved.

This is especially useful if you want to get a mortgage, invest in real estate, apply for high-end credit cards to go and get free travel, or even just get approved to leasing a car, renting an apartment, or anything else you would ever want to do in life. And the best part about all of this is that getting a good credit score is entirely free to do and relatively easy as long as you just follow these few simple steps:

1. Always pay off any credit cards in full by the time they're due.
2. Keep your opportunities for credit cards open as long as you can because the longer you keep them open for, the higher your score will be.
3. It does help to have multiple types of credit; this could be multiple credit cards, an auto loan, mortgage payments, a student loan, or anything else you could throw into the mix.
4. Do this consistently as long as you can. Just by following this advice, always paying on time and never carrying a balance, you should be able to achieve at least a seven hundred and fifty credit score within a few years of doing this.

This would be a significant financial milestone for every twenty-something to work towards. This would set you up for the best path to properly handling your finances, paying off debt, and getting some of that sweet, sweet, cheap mortgage money anytime you want to buy a house or invest in real estate. Your future self will thank you so much for doing this!

The second, speaking of paying off debt, it would make me really happy if by the age of 30 you've gotten yourself what I like to call "bad debt-free." It's basically like saying you're debt-free—except you're saying bad debt-free! See, I've had a lot of these financial milestone articles that advocate trying to be debt-free by the age of 30, but from the way I see it, not all debt is bad debt. In fact, some types of debt could actually be really good to keep!

So here's my own distinction between what type of debt is good and what type of debt you should aim to get rid of by the age of 30. First, if any debt makes you more money than it's costing you, then probably it's good debt. For example, this could be a low-interest rate mortgage on a rental property that cash flows, or it might be a low-interest rate auto loan where your money can make you more money than what you pay in interest.

In other words, if your debt is used as a tool to profit from, then generally it's a good idea to keep it. The second, most of the time, if you're paying under a four percent interest rate, it's probably a good idea not to pay it off early because your invested money can make you more money than what you owe in interest, allowing you to profit the difference.

However, here's my criteria for bad debt: One, if having debt doesn't end up making you more money, then it's probably bad. This could be an expensive auto loan or making the minimum payments on a credit card to buy things you don't really need—really anything that isn't essential. Stay away from that.

Number two: If you're paying more than a five percent interest rate, then I almost always advocate trying to pay that off as soon as possible unless you really know what you're doing and it's a rare circumstance, like a rental property that just cash flows insanely well. For most people, you would just get a better ROI by paying off any high-interest rate debt above five percent than trying to invest your money to profit the difference.

To me, having any debt above 5% interest is really just worth paying off as quickly as possible. So really, for the way I see it, it's not necessary to want to call yourself entirely debt-free by the age of thirty because some types of debt can actually be really useful in terms of making more money and being financially responsible. This is really one of those things where if you use it incorrectly, it has the potential to completely destroy your life, especially at an age where you should be prioritizing saving and investing and not spending and making monthly payments.

So start on the right track when you're young: stay out of consumer debt, get the habit of only making purchases that you could afford to pay with cash in your bank account at that time, or in certain situations, use debt strategically as a way to make more money and build your net worth. But ideally, by the age of 30, make it a goal for yourself to be completely bad debt-free! And the sooner you could start on this, the better.

The third, I know a lot of these articles recommend that by the age of 30, you have one times your annual salary saved up or sixty-six thousand dollars invested. In a way, I agree with this. However, I think there's a small fault in this line of thinking in that in your 20s, your salary is gonna be fluctuating wildly. I've seen some of my friends graduate college at the age of 22 and then take on a $50,000 a year job, and they continue doing that for years until boom! All of a sudden, they turn 28 and land a hundred and fifty thousand dollar a year tech job.

So, all of a sudden does that now mean that they need to save a hundred and fifty thousand dollars by the age of thirty if they want to hit that goal? Instead, my line of thinking is this: by the age of thirty, you should aim to have one and a half years of your expenses invested. That means if you're spending $3,000 a month on your rent, car payments, utilities, insurance, food, and everything else that comes along with that, you should aim to have at least fifty-four thousand dollars invested.

Or if you're spending two thousand dollars a month, that would be thirty-six thousand dollars invested. Now, I realize I'm probably already talking to an audience that's very financially savvy; that means you're probably the type of person who's already saving a considerable portion of their income and already investing it.

So for those people, if that is you I'm talking about here, taking these articles' advice about saving one year of your gross salary pre-tax by the age of 30 will come without a problem with relative ease, and if anything, that might be an understatement. However, I would say that my suggestion is more so aimed at the majority of people out there who want to learn about personal finance, who aren't really sure where to begin, and want a reasonable goal to work towards that isn't fluctuating up and down with their income.

Because at least for me, your expenses are usually the one thing that you have complete control over, regardless of how much money you make. Right now, if you're living off of thirty thousand dollars a year, you could still live off of thirty thousand dollars a year whether you're making fifty thousand or two hundred thousand. That is not gonna change unless you consciously decide to spend more.

So, by aiming to invest eighteen months of your expenses, you're gonna be putting yourself in a great position financially to take more risks with your career, not worry about market downturns, and rest peacefully at night knowing that even in the worst-case scenario, you're gonna have your overhead expenses taken care of for quite a long time just in the event that something is to happen.

The fourth, by the age of thirty, I highly recommend that you create a second source of income in addition to your main job. I'm surprised this is something that isn’t mentioned more often because as you get older and advance in your career, it's so important to use that as leverage to make even more money and diversify income into other areas. After all, when surveyed, it was found that almost two in three millionaires had at least one extra source of income, with the most common being real estate investing.

This usually all starts when you make money from your main career and then invest a portion of that into something else that makes you more money, which then gives you even more discretionary income to invest. After a while, this snowballs and you're making more and more money without you needing to work any additional hours. Doing this allows you to spread out your risk so that you don't have all of your income coming in from this one source.

So by going and creating additional income sources, it'll just give you something additional to fall back on should anything happen. And for me, this is how I did it:

1. I saved as much money as I could working my main job, which was working as a real estate agent.
2. I've been invested that money in real estate, which made me even more money in rent.
3. I then used those rental profits, in addition to the savings as a real estate agent, to go and buy even more rental properties.
4. I then used that income to further diversify into index funds in the stock market.
5. That income continued to grow, which allowed me to go and make YouTube videos on the side for fun.
6. I now use all of that YouTube income to further invest in real estate and diversify my investments.
7. Lastly, I smash the like button for the YouTube algorithm.

So, as you could see, it all begins with the main business, which then gives you money to invest with, which gives you more money to invest with, and then as you have the time, create additional income. The most successful people that I see all follow this, and they either have multiple businesses, running multiple income sources, or multiple investments.

Now, in terms of what you could begin doing today, I would start off by figuring out what you want, what you have time for, and what you like doing. Do you want something entirely passive, or do you want to work on something for the potential to make even more money? You also have to think about how much time you have to dedicate to this. It could be as small as working a part-time job on the weekends and then investing that money back in the stock market, or instead, you might want to spend a whole bunch of your time reading up on real estate investing and working to create a rental property empire on the weekends.

But overall, no matter what, creating a second source of income by the age of 30 is going to put you so much further ahead and will give you so much more flexibility and diversity in terms of what you could do in the future with your time.

And then finally, number five, I highly recommend that by the age of thirty, you aim to save at least twenty-five percent of your income and invest that towards your retirement. Here’s the thing: for most people to be able to save and invest twenty-five percent of their income, it takes skill. You need to be dedicated when it comes to tracking your expenses. You need to be disciplined when it comes to your spending. You need to live below your means, and you need to place an importance on saving for the future—and being able to save twenty-five percent of your income comes as a byproduct of doing all of that consistently.

So, in order to do all of that, here’s what I recommend:

1. Use sites like mint.com or personalcapital.com, or you need to budget to go over how much money you make and how much you spend each month.
2. From that, create a list of all of your mandatory expenses; this could be the bare minimum you need to live off of, including your housing, your food, your insurance, your transportation, or anything else that is required for you to live day-to-day. This is going to be the no-frills amount that you could not possibly live without, and now this is going to be the baseline from which you create your budget.
3. The second, you'll be needing to create a list of all of your discretionary expenses that you want to have but don't need to have. This could be an Equinox gym membership, or a Mercedes lease payment, or going out to Mastro's every Friday night—payments, or anything else that you could cut back on if you really needed to.
4. Then, third, once you figure out your mandatory spending and your discretionary spending, see what you would not mind cutting back on just to increase your savings rate. Chances are, when you do this, you could find a lot that you could start cutting back on without ever realizing it.
5. And fourth, automatically invest that difference in that savings every single month. This savings amount should be treated exactly like a bill that you have to pay no matter what, except this is a bill that you are paying to yourself. Preferably, you shouldn’t even have this money in your account for longer than a day or so because otherwise, it might be too tempting to go and want to spend. So consider this a must and have it taken out of your account and invested as soon as possible because I truly believe, out of sight, out of mind.

I promise, once you get in the habit of doing this consistently and saving at least 25% of your income every single month, you're not going to even know any money was missing when you started cutting back, and you'll watch your savings and investments grow considerably. Not to mention, it's really encouraging to start to see how much money you're saving every month.

If you're anything like me, after a while, you start to see it as almost like a personal challenge. Ideally, all of this should start to become fun after a while, and it really all begins with the principles and tricks that it takes to save 25 percent of your income by the age of 30.

And those you guys are my top 5 financial milestones that everyone should aim to achieve in their 20s. Because honestly, I disagree with the articles that say that you should have a certain net worth, or make a certain amount of money, or buy a house, or anything like this that isn’t for everyone. Each of us is going to be on our own individual path. This is not a race to the finish line.

Some people end up making more money in a more expensive city that costs them more to live in; other people might make less money in a less expensive city and just not want any luxuries. Some people might not want to buy a property and tie themselves down to one area, and other people might see it as a sense of security and a good investment.

So, I would really hope that these financial milestones are applicable to anyone who watches this video, regardless of how much money you make or where you are in life. By no means are these achievements set in stone! Like if you’re 29 years old and you have a 740 credit score and you only save 20 percent of your income, that does not make you a failure. But this could serve as a guide of what you should be working towards so that that way by the time you're 30, you'll be on a steady path towards early retirement, watching YouTube videos all day long, and smashing the like button for the YouTube algorithm.

So, with that said, you guys, thank you so much for watching! I really appreciate it. As always, if you guys enjoyed this, make sure to subscribe and hit the notification bell. Also, feel free to add me on Instagram; I post there pretty much daily. So if you want to be a part of it there, feel free to follow me.

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Thank you so much for watching, and until next time!