Your 30s are often equal parts exciting and challenging, marked by pivotal financial decisions. Some people in their 30s are first-time home buyers. Others may decide to start or expand their families. 30-somethings may decide to take the next big step in their careers. Whatever your 30s have in store, it’s smart to establish financial security to pave the way to the life you envision – and check off these six essential money milestones.
Strengthen Your Safety Net
If you haven’t set up an emergency fund yet, put it at the top of your priorities list. This fund should cover daily living expenses and bills for at least six months in a liquid savings account. It’s designed for true financial emergencies, such as car or home repairs, job loss, or medical issues. Consider setting up automated transfers to make the savings process seamless. You’ll thank yourself later!
Life insurance can bring peace-of-mind to both you and your oved ones. Generally, age and cost of life insurance are inversely related. That means it’s smart to lock in a low rate in your 30s, as this can drastically impact the amount of money you spend on insurance over the course of your life. Keep in mind, when it comes to life insurance, there’s no one size fits all solution. Consider your unique household’s needs and how they may change in the future. A financial advisor can help guide your choice.
Kick Up Savings
The sooner you start saving for retirement, the better. If you didn’t start saving in your 20s, jump on it during this decade. If you already have established retirement plans, this is an ideal time to ramp up your contributions and explore additional options. Investigate which retirement savings options are available to you, whether they’re employer-sponsored or opened individually. Many retirement options are accompanied by tax advantages. A frequently suggested retirement savings goal is two to three times your yearly salary by the time you hit 40.
Depending on your life circumstances, you may want to give other savings a boost, such as funds allocated to a new house, car or computer. Or, perhaps you want to save for continuing education, travel or current and future children. Whatever you want to accomplish, your 30s are a good time to start working toward these investments.
Eliminate Inefficient Debt
Some form of debt is usually unavoidable in today’s society. Low-interest debt can be an effective tool to increase your net worth and leverage your wealth. This can include taking out a mortgage, investing in education, and other long-term goals. On the other hand, you’ll want to eliminate inefficient, high-interest debt (like credit card debt). This type of debt can accumulate quickly – and easily spiral out of control, doing more damage than good. If you carry credit card debt month-to-month, make it a priority to pay it off completely – and avoid new charges that you can’t afford to pay off monthly. By avoiding temptations and building an emergency savings fund, you can save thousands of dollars a year in interest alone.
Stay Organized to Reduce Stress
During each decade, it’s important to keep your financial life organized. With an array of technologies and mobile apps at your disposal (or even a good ole fashioned spreadsheet), it’s easier than ever to maintain a budget, track expenses, and automate bill pay and savings. At the end of the year, take a pulse check: review credit reports and re-evaluate your budget to ensure your finances meet your current needs and goals.
Consult a Financial Planner
Facing financial challenges, properly budgeting, accounting for unexpected expenses, eliminating debt, and planning for the future can feel overwhelming. But you don’t have to go it alone: meeting with a financial planner can provide value throughout your life’s transitions. Financial planners can help you set realistic goals, understand what it will take to reach them, and outline a pathway forward. This is a key decade that can truly alter your financial trajectory – getting an outside, expert perspective can help you reach your goals.
We’ve also written about financial milestones for people in their 20s. We covered some significant steps like starting to save for retirement, getting insured, and building good credit.