When you reach your 30s, your life and especially your financial life can look quite a bit different compared to your 20s. Maybe you’ve sold that old car you drove for more than a decade, started saving for retirement, and began earning more in your job, for example.
Your 30s are when you start to make the decisions that will ultimately affect you for decades to come. You don’t have to figure it all out in your 30s, but you should start creating a solid financial foundation.
With that in mind, the following are some milestones and things to work toward during this period of your life.
Start or Build Your Emergency Savings
Often, when we’re in our 20s, we don’t have much of an opportunity to put money aside for an emergency, or perhaps we don’t think it’s needed. You may be paying your student loans or not making as much money in your 20s. By the time you’re in your 30s, however, it’s essential to have an emergency fund.
You should make this your top overall financial priority.
Your emergency fund should be liquid and easily accessible, and separate from your other money so that you aren’t tempted to dip into it.
Aim to have at least six months’ worth of expenses in your emergency fund.
Advance Your Career
You might not think about advancing your career as a financial move but it is. The only way to eventually gain financial freedom is either to cut your expenses or earn more. Ideally, you can do both.
You should be mindful of the progress you’re making in your career. If you’re working for an employer that isn’t offering opportunities for advancement, figure out if there’s something you can do to change that or if you should look for a new job.
Don’t get complacent in your job if it’s a financial dead-end.
You need to be proactive about advancing your career. Don’t just sit back and think opportunities and raises will come to you. Instead, seek them out. You can also make yourself more marketable by advancing your skillset through certifications and similar programs.
Know what the market value is for your skills in your position, and if you aren’t getting paid for that, plan to ask for a raise. If you get a no, ask what you can do to get one.
Always Have and Follow a Budget
If you didn’t start seriously following a budget in your 20s, you should do so now that you’re in your 30s.
Most people have no idea how much money they spend versus what they have coming in. Not being able to visualize your spending and income will be a hindrance to financial success.
You need to allocate where every single dollar is spent. That doesn’t mean you can’t treat yourself or buy the fun things sometimes, but that padding for those purchases needs to be built into your budget.
What so many people find when they start to budget is that they’re spending money in unnecessary places.
A few dollars here and there absolutely add up.
To start, spend a month documenting everything you spend. Write it down and keep receipts because this will help prevent you from forgetting about those small but impactful purchases, many of which you might make on a whim.
Try to Live Off 90% of Your Income
If it applies to you, your 30s is a time to stop spending all of your income. Aim to spend 90% and then save 10%. The best way to make sure you’re consistently saving 10% is to set it up so that it’s automatically deducted from your check every time you get paid. Eventually, your goal should be to decrease that 90% and increase the 10%.
Try to live off anywhere from 60 to 80% of your check and save the remaining 20-40%.
Invest in Transportation That’s Reliable
When you’re in your 30s, as we mentioned above, you might have sold the old car you were driving for years, but when you’re ready to buy a new one, be careful. You need a reliable, economical car and a brand new vehicle is not a good investment.
Make Sure You Have Health Insurance
As you get older, having health insurance that provides you with good coverage is important. If you can afford a high deductible plan, you can go with that option because it can still make sense in your 30s unless you have a lot of health issues.
You can then put money into a Health Savings Account. You’ll earn a tax deduction, and your money can grow tax-free—you just have to use it for qualified medical expenses.
Evaluate Your Asset Allocation
Your financial strategy should be well-diversified. You want a good mix of safe and riskier investments.
You’re still a reasonably young person in your 30s, so you should take on as much risk in your investing as you can stomach. You have a long horizon before retirement, so short-term volatility isn’t going to affect you that much.
Your long-term savings when you’re in this part of your life should be in relatively high-risk stocks and mutual funds. Of course, there’s no guarantee that high-risk allocations will mean you have higher long-term returns, but it’s more likely than if you only stick with safe options.
Don’t Treat Retirement As Your Only Goal
Sometimes we start to see retirement as the only financial goal we should have. Yes, it’s an important long-term financial goal, but not the only one. Think about things you want to save and invest for, like a down payment for a house, vacations, or having a family if you don’t have one already.
You should have multiple financial goals at this point in your life, and you can prioritize those. Retirement might be the first priority, but you can also put money aside for other important things.