No savings at 30? Here's my 3-step plan for $2,000 of passive income per month

You might have no money, but youth is on your side. So get cracking!

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So you've hit your 30s but have nothing in the bank account.

It's nothing to be ashamed of. According to National Australia Bank Ltd (ASX: NAB), the typical 30-year-old Australian has roughly $20,000 or less saved in their piggy bank.

Source: National Australia Bank

The great thing about youth is that time is on your side.

A prudent long-term investment strategy can result in a substantial nest egg, capable of providing you with a regular passive income.

Let's say you want to eventually rake in $2,000 of such returns each month.

What would you do? Where do you start?

1. Save

The first thing to do is start saving.

As US financial expert and buy-and-hold advocate Brian Feroldi said, this is the most critical habit you need to form to build wealth.

Believe it or not, it's more important than the size of your pay packet or investment returns.

For one, a high salary is no protection against profligacy.

"Just ask some of the highly-paid celebrities and athletes who [end] up filing for bankruptcy protection — Mike Tyson, Nicholas Cage, Lindsay Lohan," said Feroldi.

And investment returns certainly help build wealth, but a 50% per annum return will mean nothing if you haven't saved enough to invest.

So can you set aside $1,000 each month?

If you can manage that, we're on our way.

2. Invest to grow

So after a year of saving, you'll have $12,000 to invest.

While the past is no indicator of future performance, we can use history to give us a guide and set goals.

According to Vanguard, over the 30 years to 30 June 2022, ASX shares returned an average of 9% each year.

Yes, some years your investment will shrink. But if you stick with it long enough, the stock market will grow your wealth.

And that's where the advantage of youth comes in.

You don't even have to pick stocks. Just stick your original $12,000 into an ASX index fund, continue to add $1,000 each month, and reinvest the returns.

Believe it or not, after 15 years your balance will be a whopping $424,462.

3. Reinvest for income

But what about the $2,000 of passive income you promised, I hear you ask.

Well, now you can grab that $424,462 nest egg you built up, and switch it to high-yield dividend stocks.

Again, you don't even have to pick individual ASX shares.

An income-focused exchange-traded fund (ETF) like Vanguard Australian Shares High Yield ETF (ASX: VHY) has paid out 5.8% dividend yield over its life.

At that rate, your investment will earn $24,618 in distributions each year.

And that's $2,051.50 of passive income per month.

Mission accomplished.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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