By the time you’re in your 30s, you may have gotten to a point in your life where you’re more comfortable and stable in your career. You could be working on making big purchases and also setting more money aside, particularly if you’ve come to a point where you’ve paid off student loans and other debt from your younger years.
From having an established emergency fund to estate planning if you have a family, there’s a lot to get done financially in your 30s, and the following are some goals to work toward achieving during this time in your life.
Save An Emergency Fund
In your 20s, maybe you started your emergency fund. You should aim to have at least $1,000 in your savings account before you move on and start paying off debt.
Once you’re in your 30s, you might have more obligations to consider than you did in your 20s, like a mortgage or a family. You want to try and build a more robust emergency savings account, so if something unexpected happens, like a layoff or you’re hurt, you have at least six months’ income set aside.
Six months is the number for a reason. According to research, after you lose a job, that’s about how long it can take you to find another one.
When you have that much money set aside in cash, it also allows you to take more financial risks that could pay off.
By the time you’re 40, if you really want peace of mind, try to save a years’ worth of income.
Pay Off Debt That’s Not Your Mortgage
Maybe in your 20s, you started working on repaying your student loans. You could have them paid by now, and if not, stick with that. You should also work on paying off credit card debt and keeping it low going forward and paying your non-mortgage debt.
Put as much of your savings and income as you comfortably can toward cutting debt out of your life in your 30s.
As you’re moving toward your 40s, you want to think about building for the future rather than paying off your past.
Put At Least 15% of Your Income Aside for Retirement
If you’ve already started saving for retirement, maybe you were only to contribute enough of your check to get your employer’s 401(k) match initially. You might also be allowing the auto-enrollment policy to determine how much you save, and this is usually only around 3%.
The recommendation is that you’re saving a minimum of 15% for retirement, but your employer’s contribution or match does count.
Every time you get a raise, increase your contribution. If you get a bonus or cash gift, think about putting it toward your retirement.
Audit Your Insurance Coverage
Insurance is very much part of your financial life, even though it might not be the first thing that comes to your mind.
As you grow your assets and your life changes, your insurance needs may change as well.
For example, you might need home insurance if you buy a house, or if you have children or loved ones who are now financially dependent on you, you might invest in life insurance.
You might also want to go over your insurance and make sure that along with adequate coverage, you aren’t paying more than you need to. Compare quotes and shop around on a regular basis to see if there are any opportunities to save money.
Work On Your Credit Score
When you have a strong credit score, it can help you in essentially every other financial area of your life.
Your credit score, for example, determines the interest rate you get on big purchases like a car or house.
The credit score you have is going to help determine if you can refinance your student loans and save money too.
When you have good credit, it’s a way to save money.
Make Sure You Have a Budget
If you don’t already have a budget in your 30s, it’s non-negotiable. If you have a budget, but you haven’t gone over it in a while, do so at least every year.
Maybe you got married or had a child, and that requires you to revisit your budget as well.
Your budget is one of the best financial tools you can provide yourself. It helps you see how you spend money, what you have coming in versus going out, and set goals for yourself.
Setting a budget is scary at first because a lot of people don’t want to be honest with themselves about their spending, but there’s no way to make productive, positive changes without seeing the reality of your financial picture.
When you’re creating a budget, gather all of your income and expense information.
From there, start to categorize your fixed and variable expenses. Fixed expenses are the required things you pay the same amount for all the time, like your mortgage or rent. Your variable expenses fluctuate from month to month like groceries, gas, and entertainment.
Total your monthly expenses, and then begin to make adjustments to those where you can.
You always want to look for places you can reduce your expenses.
Diversify Your Investments
Once you have the financial basics in your 30s, like your emergency fund and a solid budget, you can start to take on more financial risks.
You should likely still stick with ETFs and mutual funds in your investments, but make sure that you have options in your portfolio that are a good fit for your life right now and your comfort level.
You should invest mostly, if not completely, in stocks when you’re in your 30s because they provide the best opportunities for long-term gains.
You want to diversify between small, midsize, and large-company stocks, as well as domestic and international picks.
Your 30s can actually be an exciting financial time for you because it can be when you start making real progress toward your larger goals in life.