Financial Advice For Every Decade:
Steps To Take As A 30-Something
Age is just a number, right? Time has passed by quickly in recent years, and you’ve reached an age milestone that seemed so far away for so long. It’s here whether you like it or not. Don’t be put out, it had to happen!
Fortunately, you are in control of what your 30’s will look like. This decade is the perfect time to take control of your health, career, and finances. You will be busy, but the work will be rewarding. By properly preparing now, your best years will undoubtedly be ahead of you.
The major theme of these years would be to “Start now, not later.” You can kick the can down the road for this decade, or you can kick it into high gear then get in the left lane and put the hammer down! By choosing the second option, you will be propelling yourself forward to success. Much luck to you in the years ahead! These steps will help you along your road to reaching goals, both personal and financial.
1 – PAY OFF THAT DEBT
Now is the time to start or continue paying off your debt! Paying off debt can be difficult, so it is important to remind yourself of the value that debt can steal from your financial situation. Debt is a threat to your financial security because another person or company has laid claim to your hard-earned cash. Instead of securing your financial future by increasing your emergency fund or saving for retirement, you are forced to pay other people first.
There are many methods from different voices in the financial community detailing ways to pay off debt. It doesn’t really matter which method you choose, just do it! For additional motivation for paying off your debt read here to see the many reasons why paying it off will be worthwhile.
If student loan debt is still lurking around, relentlessly pursue paying it off. Credit card debt can be especially detrimental. The annual percentage rate on credit card debt is more than double the long term average annual return of the stock market. This means that when utilizing a credit card you are not borrowing dollar for dollar. Pay off the debt, then make a commitment to not carry a balance on credit cards.
The lack of debt payments in your life will put you in control of your money. Because of this you will be able to accomplish the other important financial goals of this decade.
2 – ENSURE YOU HAVE A GOOD CREDIT SCORE
This article details nine benefits of a high credit score. Hopefully, by diligently paying off debt, your credit score will be improving in the near future. Your new and improved credit history can have a significant impact on your quality of life now and in the future.
Perhaps the most important impact of your revamped credit score will be in your ability to secure a home loan. At this stage of life, you will likely be moving on from renting and will desire a more permanent housing solution. Since very few people in their 30s are capable of paying cash for a home, in most cases a mortgage is a necessity. If you don’t have a good credit score, this process can be unnecessarily difficult. If this is your first time buying a home, brush up on several things you need to know about mortgages.
3 – CREATE A BUDGET
You have left the needless, unorganized spending of your 20s behind because you are becoming the master of your finances! Now is the time to be mindful and intentional about spending and savings. With the help of your spouse, prioritize what is important for you and your family. Use these things as a map for creating long-term financial goals that will provide you with security and satisfaction.
Now that you have long-term financial goals, use them as a filtering process for creating your budget. Ask yourself, “Will purchasing an expensive new car help me retire with dignity?” or “Will remodeling our kitchen increase my overall financial well-being?” The answer to these budgeting questions will not always be clear. Sometimes it will be difficult to find an answer, but your long-term financial orientation is the perfect guideline when it comes to assessing what is most important.
A budget will allow you to create a plan that designates a purpose for each dollar that you earn. Utilizing a budget will allow you to stomp on the accelerator and enable you to pay off debt and reach your financial goals at a faster clip.
4 – INCREASE SAVINGS AND EMERGENCY FUNDS
Each commercial, advertisement, and society in general encourages us to spend, but saving by paying yourself first is where financial health begins. At this point, most of us have a spouse or children in our lives who depend on us financially. You should create an emergency fund for their sake and well-being. By having an emergency fund, you will avoid some of the hardship created by unexpected expenses. If you lose your job, these savings will help you and your family bridge the gap to the next opportunity. If one of your kids injures themselves, as children are prone to do, you will have the adequate funds necessary to cover your health insurance deductible or whatever expenses may not be covered by insurance. There are many reasons to have an emergency cash reserve, so if you need more convincing continue reading here.
Unexpected expenses are a reality of life. Knowing that you have funds in the event of an emergency will give you peace of mind. Your more established status as a 30-something will bring on the potential for bigger emergencies, so be responsible by increasing your emergency fund totals to keep up with this change.
5 – ESTABLISH RETIREMENT GOALS AND BE DILIGENT
If you started investing in your 20s, you could have a decent amount of savings at this point in your life. You can’t stop now though or when it comes time to retire you’ll be up a creek without a paddle. Now may be the time to consider seeking further guidance when it comes to your finances. Be on the lookout for a financial advisor that aligns with your personality and values. If you think you’ve found the advisor of your dreams, make sure to ask them these questions to ensure they will always act in your best interest. As time goes by, the relationship with your financial advisor will become increasingly valuable and important so you will want to make sure that they will be a good fit for you now and in the future.
If you procrastinate in saving, your retirement outlook could be increasingly dim. The infographics in this article highlight the importance of starting sooner rather than later when it comes to saving for retirement. As you save, be diligent! If you can overcome the initial difficulty of creating a plan, you can now spend all of your time and effort in sticking to the plan. Stay focused, and it will be a breeze when it comes time to retire.
Even if you have yet to save for retirement as you enter into your 30s, starting now will still leave you with plenty of time to live well once you retire. In our 20s, if we were saving, it was easy because we had relatively few major expenses and were experiencing the first taste of a substantial income. Now, we must balance the requirements of saving for current personal and family needs as well as saving for our future retirement needs. You need to know how much you will need in retirement in order to establish savings goals. This is an easy to use retirement calculator that will identify what you need for retirement and the annual savings requirement to achieve this goal.
6 – INVEST
If your employer offers a 401k match of any level, start here! In a 401k match, your employer will match whatever contributions you make up to a certain percentage of your annual income. This is essentially free money, so it would be unwise to not utilize this benefit as an employee.
In your 20s, there was really no need to contact a financial advisor to help with investment management. Now as you increase your annual savings and focus on preparing for retirement it could be time to find a financial advisor. They will be able to help you navigate through the more difficult parts of investment management and help you maintain the discipline required to stick with a financial plan.
A financial advisor can add value in a variety of ways, read here to get the full scoop on how an advisor can make a difference in your life and finances.
7 – SAVE FOR CHILDREN’S COLLEGE
Student loan debt will continue to be a threat to wealth building for your children in the future. Tuition and other college costs will continue to rise. Many parents want to assist their children with these expenses, but in many cases this can be detrimental to the parents retirement savings and outlook. If you plan on helping your children pay for college, it is best to start while they are still young. They will grow up quickly and the time leading up to the beginning of their college education will fly!
A 529 Plan is typically the best way to save for children’s college. Contributions to a 529 are not tax deductible, but the investment earnings will not be taxed when the money is withdrawn for expenses associated with college. Parents at all income levels are able to save for college using a 529 plan, so there is no reason not to take advantage of this tool.
8 – LIFE INSURANCE
In our 30s, we are building a legacy. You are creating habits that enable you and your family to live comfortably, but would they be in that position if you weren’t around? We all will die someday, it could be tomorrow or 50 years down the road, but it is inevitable. You should leave everything better than you found it, especially when your loved ones and business partnerships are involved. This article provides a variety of reasons to purchase life insurance, and will provide you with questions to ask as you consider life insurance options.
If your employer provides you with life insurance, make sure that it will be enough to do the job. Additionally, you should consider buying life insurance that is independent from your employer. What if you suddenly change or lose jobs? If your new employer does not offer life insurance to its employees or the coverage is inadequate, you’ll be left to solve this issue on the fly. Instead of scrambling in a wild search for life insurance coverage if the need arises, plan ahead by taking initiative. Your family needs you to be a leader in this area of personal finance.
This is an all encompassing article on insurance, including but not limited to car, homeowners, medical, and life. This is the decade where insurance becomes a major piece of your financial outlook. So learn as much as you can, assess your situation, and make the right decisions accordingly.
9 – EVALUATE YOUR CAREER TRAJECTORY
I recently transitioned into a new position with a new company, SignalPoint Asset Management. It is critically important to have a sense of satisfaction and fulfillment in your work. You will never be able to reach your full potential, and ultimately your highest level of satisfaction if you are bogged down in a position that is not fulfilling. Pursuing your potential is not a smooth path, and neither is your career. It is critical to evaluate your career trajectory to see if your current position is allowing you to grow and develop, or if it is actually holding you back. I have loved taking on the new challenges associated with beginning work in a new place.
Perhaps a similar transition is in the cards for you. Our 30s is one of the most important decades when it comes to setting up and preparing for promotions and increased success in future years. It is natural to be apprehensive when it comes to such a serious proposition as a job change. If you are wise in this pursuit, the benefits could be exponential.
10 – FOCUS ON YOU
The Jones family has been the detriment of many solid financial plans, don’t let them wreck yours. It is better to focus on the things that you can control. You can be diligent in saving for retirement and children’s college, but you can’t determine if your neighbors’ vehicles and homes will be nicer than yours. It is more important to be well off than to appear to be well off. It can be hard to ignore other people who lavishly display their wealth or maintain seemingly extravagant lives but focus on you and your family. The appearance of being wealthy is expensive to maintain, and if you could look into the savings and investment account of these “wealthy” people you might be surprised. The secret to building wealth is to live within your means month after month and year after year. Your 30’s will be a fruitful, wealth-multiplying time if you live by this principle.
ALL THAT TO SAY
These steps will make the already great decade of your 30s even more productive and fruitful.
Much luck to you!
– Preston Smith