Broker Check
Money in Your Thirties | Setting Your Foundation

Money in Your Thirties | Setting Your Foundation

December 01, 2019

Let’s be realistic, the way you approach money in your thirties is going to be vastly different than in your twenties. In your twenties, you were trying to figure things out and get a handle on your finances. Maybe you made mistakes or had debt you realized you never should have taken on. By the time you reach your thirties, you have years of financial experience under your belt and by then, most money habits are difficult to break.

Thirties tend to be the toughest decade for individuals. Between family changes and career changes, you have a lot going on. That’s why in your thirties, it’s incredibly important to really get a handle on your finances and create your financial foundation.

2. Control your budget and debt

By now you should have a handle on spending less than you earn and saving close to 15% of your income for your financial goals.

Savings should be thoughtless and on autopilot. At this point, expenses are usually consistent and it’s time to start thinking about longer-term goals and making sure your budget is aligned with your financial priorities.

This also includes paying down debt. Now more than ever it’s crucial to have a plan for paydown and avoid adding to the balance.

2. Revisit your finances when life events occur

Get married? Have a baby? Lost a job? These are all major life events that warrant a look into your finances.

Does your budget need to be reconstructed? I usually advise clients to revisit budgets annually, usually minimal changes occur. However, major life events can completely overhaul your perfectly constructed budget. Having a baby will increase your monthly spending (think daycare, diapers, etc.). Getting married means dual incomes and lots of moving parts that need to be synched. Losing a job could take a negative hit on your savings.

That’s just the impact of life changes to your budget. You should also be looking at insurance, estate planning, just to name a few, when life events occur.

3. Increase retirement contributions and invest outside of your 401k

You want to travel the world in retirement? Buy some land? Retire early?

Make sure you’re contributing at least 10% of your gross income to your retirement accounts. I like to see a range of 10 – 13% JUST for retirement savings. Have other savings goals? Then your savings rate might be upwards of 15 or 20%.

It’s also time to start investing outside of a bank savings account. The longer you let excess cash sit in savings, the more at risk you are to losing buying power due to inflation.

By investing our money, we put our money at work for us, ultimately having to work less for our money.

4. Commit to completing that debt repayment plan.

Most of us have student loans. If you stuck with your standard 10-year repayment plan and graduated at 22 or 23, that means you should be coming to an end on those payments.

Everyone has a different viewpoint on debt, and if used appropriately it can be used as leverage. However, no one ever regretted being debt-free. Not having monthly student loan payments, car payments, credit card payments can free up cash in your budget to allocate towards your financial goals or meaningful lifestyle items.

5. Have that emergency fund fully funded

In your twenties, you should have set your “target” savings goal. In your thirties, you really need to be making it a priority to fully fund it.

Typically, three months if you’re a dual-income household, and six months if you’re single or married with only one income source.

This can be a hefty number, and it’s going to take some time to fund. With major life events occurring in your thirties versus your twenties, it is essential to make sure you have that emergency fund in place.  Especially so you don’t undo all of your hard work and put yourself back into debt if something unexpected comes up.

6. Educate yourself

Gone are the days where you rely on your mom or dad to just take care of things for you. Or to lean on a significant other if this topic interests them more than it interests you. Educate yourself on financial topics: the importance of investing, the basics of your retirement plan, why it’s important to set financial goals, understanding your credit score.

Educating ourselves allows us to make more meaningful and informed decisions.

7. Don’t compare yourself to others

Everybody’s financial journey looks different. Don’t let someone else’s perceived successes get you down. It’s so easy to fall into the trap of comparing our finances to others, especially since money is still this taboo topic. Chances are, someone close to you is in a similar situation as you. Support one another.

Understand that you’re not going to see results overnight. But if you commit and take action, you’ll start to see the fruits of your labor.

Carolyn Rowland is a CERTIFIED FINANCIAL PLANNER™ passionate about empowering individuals to take control of their financial landscape. “We often tend to place our own priorities on the back burner for others, resulting in sacrifices we don’t often realize we’re making.”Carolyn believes in taking a values-based approach to financial planning. “Together we’ll define what matters most to you, what you want your life to look like, and develop a plan that fits your lifestyle.”CC

Carolyn Rowland is in the Milwaukee WI, area.