my two cents

How Much Money Should I Have by the Time I’m 30?

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Ellie just turned 29, but money-wise, she feels stuck at 22. It seems like she’ll be in debt from college and graduate school forever. Her job at an art museum in Manhattan pays a little over $70,000 — enough for her to afford her loan payments, rent a studio in Brooklyn, and do fun things on weekends, but she’s not saving anything. It’s always seemed like her peers were in the same boat, with student loans and creative jobs that don’t pay much, and now she’s starting to wonder if they’re all screwed. She thought she’d be better off by 30 — with some money put away, at least. How behind the curve is she? Where is she supposed to be, financially, and what can she do to get there?

When I was 25, I set a nebulous goal of making a six-figure salary by the time I turned 30. There was no rhyme or reason for why I chose that amount — it just struck me as a nice round number — and when the birthday in question rolled around, I wasn’t surprised to find that I was nowhere close. More importantly, I had a good job, and I remember thinking how naïve my 25-year-old self had been to set such a random financial target without taking my career trajectory into consideration. But that’s often what 30 looks like from our 20s: a benchmark of adulthood when things magically start falling into place, or should.

There are entire websites dedicated to rosy portraits of a 30-year-old’s financial state. An ideal scenario usually includes a well-padded emergency fund (at least three- to six-months’ worth of living expenses set aside in cash, no big deal), a robust 401(k) plan to which you contribute at least 10 percent of your paycheck without fail, a budding investment portfolio, and a Roth IRA while you’re at it. Of course, this fantasy 30-year-old’s student loans are long gone, and credit-card debt is nowhere to be seen.

These gold standards are not only unrealistic, they’re way too uniform. One of my friends owed $250,000 for medical school at 30, but now makes over $800 an hour as an ER doctor; another planned to open a business at 29, but was set back by a year when an unexpected health issue drained most of her savings at 28. Would you lecture either of them about her lack of savings at 30?

In your case, Ellie, it sounds like you have an incredible job in a field where you invested many years of education. You’ve also enjoyed your 20s. Were you supposed to stay home and eat peanut-butter sandwiches while your friends did fun things without you, just so you could pay off your loans sooner? Who knows. Focus on where to spend your energy now.

Instead of getting worked up about hard numbers, set goals for positive financial habits, says Bari Tessler, a financial therapist and author of The Art of Money. “One thing that’s essential to learn in your 20s is a bookkeeping system,” she says. And yes, she’s aware of how dull that sounds. “I know all the excuses — you have such a small amount of money that you shouldn’t even bother, or you’re too creative to use the other side of your brain — because they used to be mine, too,” she says. “But it’s important to track what’s coming in and going out, no matter how little you have.” Whether you sit down once a week or once a month to look at or update numbers on a spreadsheet, figure out a system you can stick to.

Personally, I used to avoid this process like the plague. Throughout my 20s, looking at my bank account would send me into a clammy-palmed shame spiral. Moderate expenses — the occasional haircut, clothing at sample sales, and drinks with friends — always added up to more than I anticipated, which made me feel like an idiot. The only way to get over it was by deploying an immersion tactic: I now get a text message with my checking account balance every single morning (there are many ways to do this, but I use an app called Digit). Watching the dollar amounts shuffle to and fro not only helps me keep tabs on my money, but it’s also forced me to come to terms with my spending tendencies — for better or for worse — instead of being shocked by them.

Indeed, self-flagellation usually doesn’t get people very far. “Sure, we should all start putting money in the market at age 22,” says Amanda Clayman, an L.A.-based financial therapist. “But looking at benchmarks like that is a slippery slope to perfectionism and avoidance. Instead, turning 30 is a good opportunity to see where you are in your financial life, and asking yourself how comfortable you are with that. If you’re in debt, maybe now is the time to come up with a solid plan to get out of it. Also, examine what’s keeping you in debt. Is it that you don’t have good boundaries with other people? Do you not feel in control of your spending behavior? Are you under-earning? This is a good time to look at your habits, because you have more runway to change bad ones with smaller tweaks, rather than turning 50 and feeling like you have to overcome a lifetime of negative consequences.”

Another skill to master: sprinkling your money around, on purpose. “For young women, it’s a mistake to say, ‘I’m going to pay off my student loans by the time I’m 29, and then I’ll get started on my 401(k) plan and emergency fund.’ Don’t do that,” says Christine Benz, the director of personal finance at Morningstar. “Get started contributing to your 401(k) as early as possible, and take advantage of those early days when compound interest benefits you the most.” Not only will this multipronged strategy make you richer in the long run, literally, but it’ll also get you in the valuable habit of putting your eggs in different baskets. “We’re all juggling multiple financial goals throughout our lives, and the key is to get comfy with it,” says Benz. “As you move across an investing life cycle, your savings might shift from your own student loans towards your kids’ college, or perhaps a bigger home, or whatever else you want to prioritize.”

If you want a more technical guideline, Sallie Krawcheck — a former big-bank CEO and the current co-founder and CEO of Ellevest, an online-investment platform for women — preaches the 50/30/20 rule: “Divide up your salary so that 50 percent goes to ‘needs’ — rent, food, utilities, etc. Then, 30 percent goes to ‘wants,’ because you’ve got to have fun. And then 20 percent goes go to savings and investing.” How you allocate the latter 20 percent will change over time, depending on your needs and goals. If you have consumer debt (also known as a carryover credit-card balance), your number-one priority is to get rid of it. After that, you’ll want to divide the 20 percent chunk between your loan payments, an emergency fund, and contributing to a 401(k), especially if your employer has a matching program.

Comparing yourself to others is unavoidable. It’s probably tempting to read about where you stack up to the Bureau of Labor Statistics’ data on average incomes for women ages 25 to 34, or how much money “should” be in your 401(k), because humans are wired to evaluate themselves in relation to others. In fact, studies have shown that people feel wealthier when their neighbors have less than they do. Be aware that your peer group has a lot to do with how you view your own finances; you might even consider finding some new friends to whom you can relate a bit more. “That’s actually one of the reasons why I left my peer group in Chicago after college,” says Tessler. “They were all getting high-paying jobs, and I didn’t know what I wanted to do yet. I was comparing myself and couldn’t keep up with the Joneses.”

You could also try having conversations about money with people you feel close to — but make sure they’re comfortable with it first. “You can’t quiz your friends or family about their finances — they might feel embarrassed or intimidated,” says Clayman. “But if you say, ‘I understand that this is a personal topic, but I respect your opinion and I’m curious about what you do,’ then you can get other people’s perspectives. And hearing feedback and diverse stories about how your peers handle their money can help you a grasp on whether your own habits are appropriate.” And who knows — they might learn something from you, too.

How Much Money Should I Have by the Time I’m 30?