Now that you’ve entered your 30s, it’s time to start thinking about things a little differently. You had your fun in the twenties, partied some, and spent a lot. You did everything a kid in his 20s was supposed to do.
However, once you turn the big 3-0, you need to make a few decisions that could affect your financial future in significant ways. It’s never too early to give some thought to your retirement. That means making some financial moves now that will pay off handsomely as you reach your 50s and 60s.
The sooner you start to save your money, the more you’ll have down the line. Put some plans into motion now. It will give you a head-start on squirreling away enough income for achieving the financial dreams of the future. Some day you might want to start a family, buy a home, travel the world, or any number of life-changing events that could lie ahead.
It’s possible you’re not even sure what it is you plan on doing three years from now much less when you’re 40. When you do figure it all out, won’t it be great to have enough wealth to do it all? We have some tips for getting you on the road to building that wealth now. That will help you reach the goals you’ll be setting for yourself as you grow older.
1. Get a Career, Not a Job
You’ve had a job or two for a while, but now it’s time to get a career. By this point in your life you’ve (hopefully) honed a marketable skill that you can now apply to a path for stable employment over the long term.
Start doing some research into the types of careers that someone with your skill set can turn into a position. Pick something in which you won’t just be making a paycheck each week but earning a salary and getting lucrative promotions and raises. Find the companies and organizations that are looking for someone with your talents.
If you are having difficulty identifying these career options, don’t freak out. It might just require you to go back to school. You can earn an advanced degree or take a few online courses to hone your current skills. Doing so will qualify you for a wider range of employment opportunities. Perhaps you’re already well-qualified but the jobs aren’t in the region where you live. Moving to the appropriate part of the country where those jobs are abundant may be the way to go for getting a good job in your chosen field.
Perhaps you’re already well-qualified but the jobs aren’t in the region where you live. Moving to the appropriate part of the country where those jobs are abundant may be the way to go for getting a good job in your chosen field.
Of course, there is always the possibility that you’re not sure what it is you want to do with your life. Now is the time to figure it out. That could include trying your hand at a few different options that are out there. Though, the one thing you don’t want to do is settle merely because you’re in panic mode and you’re not getting any younger.
Choosing the right career path solely with an eye on making enough money to pay your bills and have a place to live isn’t sufficient. This is the time where you need to be making enough money to put some away with the goal of building wealth.
However, it also makes sense to find the thing you want to do and not HAVE to do. You should be inspired and challenged in your work, otherwise the next thirty years are going to be miserable.
2. Budgeting Differently
Chances are you learned how to budget in your 20’s but you allocated your money towards things that were important at that age. Times change and so will your priorities. It’s a part of growing up.
Before you begin to lament the slow fade of your careless youth, you should consider all of the exciting things you have to look forward to on the horizon. First of all, you’re theoretically going to be making more money. That means putting that new income toward the things that matter most for your life now and in the future.
Your wants and desires are going to change from your 20’s to your 30’s. You’re going to want to start balancing your budget with those factors in mind. You may be getting married in the near future, starting a family, or opening up your own small business.
These were all further from your mind when you were in your 20’s than they are now. It’s time to put more thought towards setting and meeting specific financial goals for these changes in your life.
Yet, it’s possible that the money you’re earning now isn’t enough to account for some of the new goals you have lying ahead. That makes budgeting even more critical as you are forced to reallocate your income to the areas where it matters the most.
Here is the part where you put a greater focus on saving money instead of spending it. That will include making some sacrifices here and there. Forgoing some of the stuff that has been taking precedence in your monthly budget will give you more money to put toward the things that are more important now.
Start by tallying up all of your expenses and identifying the areas where you can cut back. It’s time to tighten your belt. You may be surprised at the some of the places where you’ve probably been a bit liberal with your finances.
If you find that you eat out quite often you may want to make some more meals at home. Brew your coffee in the mornings instead of hitting up Starbucks five or six days a week. Have you seen what a cup of coffee costs there now? For the price of one week’s coffee fix, you can buy a whole package at the supermarket that can make you a month’s worth of coffees.
Do your own yard work instead of paying for it to get done. Use public transportation more to save money on the gas you’d be using each week. There is a myriad of options for cutting your budget. You just need to sit down and re-examine your spending routines. Sacrificing now to achieve your money goals later is going to feel good when you get there. Start now to reach that point sooner.
3. The Best Way to Save
When it comes to saving for the future, you have a lot of options. Thus, you need to start researching all of the ways that can help you put away enough money for the things you want to do in life and retirement.
For a large part of the workforce in America, the 401(k) is the first and most common method relied upon for accumulating wealth. If you’ve already found a career path and a good company where you have been employed for some time, chances are that firm has offered you a 401(k) plan.
Hopefully, you’ve enrolled in their plan and you’re already contributing to it. However, there are other options you could turn to either in lieu of or in addition to the 401(k) offered by your employer.
If you’re not sure which way to go yet, then the 401(k) might be a good start. A portion of your paycheck is deposited into the account by the payroll company. You tell them how much you would like deposited each month.
Some companies offer to match the contributions you make each year, up to a maximum amount. Therefore, many employees set their funding amounts in order to get the most matching funds from the company. It’s pretty much free money, so why wouldn’t you do everything you can to get the most in matching contributions towards your nest egg?
In addition to your 401(k), there are other types of saving accounts called Individual Retirement Accounts (IRA’s) and Roth IRA’s. They can be very beneficial in helping you reach your financial goals through saving.
IRA’s and Roth IRA’s operate differently than 401(k)’s. It’s important to know the distinctions. The most important difference being that with a 401(k) you’re not in charge of the type of investments that are made with your money.
When you put your money into your 401(k) each month, you’re basically investing in a variety of stocks, bonds, and other funds. They are chosen by your employer with the purpose of growing your money through those investments.
However, with an IRA you make the choices as to which stocks, bonds, funds, and other investment options get your money. They typically have more choices than a standard 401(k). It allows you to diversify over a wider array of options while investing money for the future.
Additionally, it affords you the ability to invest responsibly in companies that have the same morals, scruples, and worldview that you currently hold. As you get older, different things are going to matter to you. Therefore, just because you need to save doesn’t mean you have to compromise those beliefs in your investment strategy.
A Roth IRA works a bit differently than an IRA, not so much in the ways you can select your investments, but in other areas like age requirements, contribution limits, and taxes. That last one is going to be very important to you as you get on the road to saving.
Taxes and other penalties can erode the money you worked so hard to save over time. Finding the best methods for preserving as much of your cash as possible will ensure you have more of it to enjoy later.
Start asking the right questions and seek out the ideal methods of saving for your retirement. That could mean talking to your parents if they have made investments of their own. Though, if they aren’t as well-versed in these matters, seek out a financial advisor who can walk you through all of the particulars.
4. Getting Insured
There are all kinds of ways to get insured. Under the current federal laws, everyone is required to have health insurance. Until they change, you need to hold proper coverage to protect you in the event of illness or injury. Hence, if you’re not covered there, it should be the very first step you take now that you’re in your 30’s.
There are other areas where you may need to seek out insurance in order to protect all of the things that are important to you at this point in your life. That could require you to buy renter’s insurance. This is done in case you’re renting a nice apartment or condominium that you’ve filled with items of value like expensive electronics and nice furniture.
If you’ve purchased a house, you will need homeowners insurance. It protects you from damage, vandalism, or someone getting hurt on your property. If you’ve got a family who depends on you to provide for them, then buying a life insurance policy could be a very important step to take now.
All of these forms of insurance are necessary and useful for safeguarding yourself and your assets. Life insurance is a smart way to ensure the financial future of your loved ones should anything happen to you. Life is uncertain and buying life insurance can reduce some of that uncertainty.
Nevertheless, buying the right policy will require you to seek out the best company. You will need to meet their requirements for obtaining the coverage you want. That means asking the necessary questions of any prospective insurer.
Find out how long the company you’re considering has been in business. Also learn the ratings they’ve been given by regulatory agencies that monitor the industry. Look at the types of coverages and limits they offer. Understand what kind of medical exam you will need to undergo before you receive the coverage you are seeking.
5. Pay Off Your Debt
One look at your credit report can give you a pretty good idea of your current debt. That can include credit card balances or outstanding student loans. Perhaps you have a mortgage or car loan that you’re still paying off.
You need to be saving effectively. Thus, the last thing you want are balances that are draining your money at a rate that overwhelms your ability to actually put money away toward accumulating real wealth. The longer you have debt hanging over your head, the more likely you’ll be paying it off well into your 50’s and 60’s. Consequently, that is when you should be using that money to enjoy life.
Do an accounting of your current expenses. Come to a number that accurately reflects how much you owe to any number of creditors. Inordinately high credit card balances can be the biggest drain on your finances because of their interest rates.
If you’re adding to your debt at 29.99%, it only behooves you to pay off that balance and stop wasting money just because you owe on your credit card bills. Come up with a smart repayment plan that will whittle those balances down as quickly as possible.
Loans and mortgages represent an impact on the health of your finances. Though, those may come with repayment restrictions that make it tougher to pay off in a short period of time. Talk to your lender and see what options you have to close those accounts sooner rather than later.
6. Fix Your Credit
Turning 30 means getting responsible about your credit. It’s possible you did some damage to your credit score while you were in your 20’s. Maybe you ran up a credit card that you never paid off. Perhaps you didn’t pay a few bills that have been sent to collections.
There could be any number of things on your report that you may not even know about. These may not even be yours in the first place. All of this is hurting your credit score. The time is now to clean it all up.
Good credit is the only way to get the things you want in life without paying more to get them. Renting an apartment, buying a home, or getting a car loan are all going to require good to great credit. Without it you could be charged more in interest rates and fees or get denied approval entirely.
That’s why it makes sense to get your credit under control now. Therefore, you can take the steps to raising your score to a level that will make lenders want to extend you credit and other advantages that those with good histories can enjoy.
When you look over your report, you may find errors. Perhaps your name or address is incorrect. Maybe you find accounts for credit cards that you don’t own and never applied to own.
Discovering these problems and getting them removed can often raise a score significantly. The Federal Trade Commission informs the public that 1 in 4 reports have some kind of error on them. The chances are you have something in your history that needs to be fixed.
7. Start an Emergency Fund
We’ve been talking at length about saving for the future. However, one other move to consider making is setting aside a fund for those short-term emergencies that can come up out of the blue when you least expect.
The purpose of this fund is so you aren’t left in the proverbial lurch in the event you unexpectedly lose your job or face a major car or home repair payment that can clean out your bank account. Without a monetary cushion to catch your fall, your assets could be diminished quickly. Then you’re back at square one. One serious medical bill could lead to bankruptcy before you know it.
That’s why it makes sense now to start putting aside some money should one of life’s curveballs hit you at the worst possible time. Though, always keep in mind that this fund is for actual emergencies.
It’s not a slush fund where the emergency is a 75% off sale at the department store or electronics warehouse. You need to be responsible about protecting this money for when times get incredibly difficult and you may not know where the money is going to come from otherwise.
Creating an emergency fund is all dependent upon you and the type of lifestyle that you live right now. This money is meant to keep you living that lifestyle in case of emergency. Therefore, there is a general rule of thumb governing these types of savings strategies.
It is to have enough money on hand that equals three to six month’s worth of your current income. If you want to add more, by all means, do so. Be sure there’s enough cash to meet all of your monthly financial obligations and expenses for that suggested span of time.
8. Make a Will
Now that you’re getting older you may want to think about setting something on paper that describes your final wishes in the event of your untimely demise. Making a will doesn’t mean you’re planning on dying anytime soon. Yet, it’s a good precaution to take especially if you have a number of valuable assets that could be at the center of any disputes among family members after you pass away.
A will doesn’t just outline who gets what. It also informs all pertinent parties who will raise your children or your dogs and what you wish to do with your home and any other belongings you own.
If you don’t have a will, total strangers can start to divide your estate in the manner they see fit. You won’t be able to do anything about it because it’s too late – you’re dead. To avoid that from happening, make sure to take the precautions now and document your instructions for your estate.
Our Final Thoughts
You were technically an adult at age 21, but the time to really start acting like it is when you hit your 30s. That means making smart financial decisions that can account for a large part of your wealth when you get older.
Following the steps all sound simple on paper. However, you may find putting them to practice in reality may prove a little more difficult. It’s true that equal parts of discipline and commitment will go a long way in helping you reach your financial goals.
Once you start to dedicate yourself to the task of financial stability the challenge becomes less formidable with each passing year. The key is to take that first step in the right direction so you can find yourself better off than you may have anticipated before you got started. The future is what you make of it. You’re going to want enough resources to enjoy it too.