The big 3-0 is a crucial financial crossroad for many people. During your thirties, you may find yourself juggling many financial concerns, like switching jobs, purchasing a home or starting a business. You may also be getting married, settling down and having kids. And now that your parents are getting older, you’re starting to think about their retirement, too.
It seems a lot to handle, but when you have options, building wealth for your 40s is not impossible. When you establish a good financial plan in your 30s and stick to the plan, you can build more financial options for your 40s.
Whether you plan on buying a condo unit for sale in another city or are thinking about having kids, here’s how you can manage your finances better in your 30s.
Update Your Emergency Fund
Financial planners recommend building an emergency fund that can cover up to six months’ worth of living expenses. You may have done this in your 20s. But now that you’re in your 30s, it’s time to update your current emergency fund. As you spend more, you should save more for the future.
During the evaluation of your emergency fund, re-consider where you want to keep it. The best place to keep your money is still a savings account or any easily accessible account.
Keep your money in accounts that offer high-interest yields. Savings account interest rates, however, differ from one institution to another. The national average is 0.09 percent, but some high-yield savings account can offer up to 2.25 percent.
Level Up Your Budgeting Goals
Now that you’re in your 30s, your goals should go beyond short-term needs. If you are a newlywed, make joint financial decisions and set goals together. If you are a new parent, set financial goals with the kids in mind.
Create savings goals that reflect your long-term priorities and plans. Determine what needs to be done to save for a bigger home or a possible move to another city. List down what you intend to do in order so you can turn your financial dreams into a reality, whether that’s finally paying off your student loans or creating a stricter budget for the family.
If you need guidance, you can always turn to financial planners. They can help you identify areas for improvement, as well as remind you of the financial basics (e.g. how much to save, do checks expire and other money matters).
Establish a Solid Foundation for Retirement
By the time you hit 30, you should have a retirement fund that’s equal to your first paycheck. When you reach 35, your savings should at least be twice your yearly pay. While that financial goal is just a guideline, it can help you determine if you should increase your contributions. Generally, 15 percent of your annual salary is enough. Whenever you get a raise, try increasing your contribution up to 2 percent until you hit your retirement goals.
One of the best ways to get ahead of retirement is to take advantage of your 401(k) match if your workplace offers one. But if your office does not provide a retirement account, explore different options. Consider opening an IRA.
Cut Back on Your Vices
Your college years are long gone but you may have accumulated more vices than you can admit – cigarettes, alcohol and fast food, just to name a few. As memorable as your younger years are, a realization hits you as you hit your 30s. Not only were these vices hard on your health, but they also made your wallet miserable.
Remember: as you transitioned from the fun atmosphere of your 20s to a more responsible decade of your 30s, what started as a fun way to pass time can become financially detrimental to you in the future.
Balance Your Long-Term Financial Goals
Your 30s are full of big financial changes, so you have to be mindful of how you spend and save money. Instead of spending money carelessly, look at your big-picture goals and choose focus areas.
For instance, you want to take an international trip, buy a home and pay your student loans. Start by calculating the amount you need to set aside each month to achieve your financial goal by a target date. By taking a hard look at your expenses, you can figure out where you’re spending too much, as well as the areas you can cut back.
Your 30s is the best time to be more financially responsible. Tackle your financial goals one at a time so that when you reach 40, you’ll be richer than you were 10 years ago.