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Please join me in giving Natalie from NatalieBacon.com a warm welcome! As I approach the big 3-0 in the next couple of months, it had me wondering what sort of financial advice I should follow for this decade. You are going to love Natalie's tips no matter your age, but especially if you are in your 30's!
For most of us, life is uncertain in our 20s. Relationships, career, and money are all over the place. And if that’s not true for you, consider yourself lucky.
For the rest of us, when our 20s end and we enter our 30s, it’s a time when life is more consistent and stable. You may be settled down with a spouse, have kids, a house, and be in one career that you plan to stay in.
Life is more serious in your 30s. And it’s the time to take your money seriously, too.
The 10 money rules below can help you take your money more seriously and lead you toward a path of financial success.
1. Maximize your retirement contributions
Your 30s is the time to start saving aggressively for retirement.
Depending on your employment status (whether you’re self-employed or work for an employer), you have different options for retirement savings. You may be eligible to contribute to a:
- 401(k)
- 403(b)
- Roth IRA
- Individual IRA
- or other retirement account
Each of these accounts is different with respect to eligibility and contribution limits. Look into which plans you can contribute to and what the maximum annual contribution limit is for you. Then, contribute that amount.
The value of compound interest is too important not to start as soon as possible.
2. Build a solid emergency fund
As you enter your 30s, your responsibilities increase, and consequently, so does the need for a stable emergency fund.
Whether it’s a home repair, a car breakdown, kids, or something else, emergencies happen. You need to have enough money in liquid savings to cover these emergencies so that when they happen they’re not financially difficult. A credit card is not an emergency fund, either!
Typically, professionals recommend anywhere from 3-6 months of your expenses saved, depending on your specific situation.
3. Pay off debt
It’s hard to accumulate savings and investments for your retirement if you’re in debt. So, you need to clean up your mess—particularly any type of consumer debt or student loan debt (but also mortgage debt if you’re feeling really zealous!).
Paying off your debt is the only way to guarantee a rate of return.
For example, if your student loans have a 6.5% interest rate that you’re paying, by repaying that debt, you’re guaranteeing yourself 6.5% because you no longer have to pay it once it’s paid off. Getting out of debt is a prerequisite to building wealth.
4. Save for major purchases
Your 30s is a time where you are likely to make some of the biggest purchases of your life (e.g.: vehicles and/or houses). Save ahead of time for these items and save aggressively. The more you can buy with cold, hard cash – the better.
Related: 6 Non-Traditional Ways to Become a Homeowner
5. Make sure you have the right insurance coverage
You need to make sure you have the right insurance coverages when you’re in this phase of life. This includes:
- Medical insurance
- Homeowner’s insurance
- Property and casualty insurance
- Auto insurance
- Umbrella insurance
Use an independent insurance broker to help you find the best insurance companies and policies for you.
6. Get an estate plan in place
If anyone would be affected with you passing away, you need to look into an estate plan (including a will, trust, power of attorneys, etc.).
Although it’s true that your assets could pass to your spouse without an estate plan, there are important reasons for you to have an estate plan in place (like avoiding probate).
The best way to do this is to fork over a few thousand dollars and pay an estate attorney to build an estate plan specifically for you. Yes, it’s expensive, but it’s worth it.
7. Focus on career advancement
You may have job-hopped in your 20s (or even changed careers entirely, like I did). Your 30s is the time to focus on one career and advance as much as you can. This will help you financially and with your work, professionally.
Need some ideas? You can:
8. Avoid mistakes, like cosigning a loan or lending money
Alongside things you should do, there are things you should not do.
While every situation is unique, be very careful considering cosigning a loan or lending someone money. Consider gifting money so there are no strings attached and your own financial security isn’t jeopardized based on someone else’s decisions (which would happen by cosigning a loan).
Bottom line is don’t put your financial future at risk.
9. Educate yourself on investing basics
As you accumulate assets in your 30s, take time to learn about investing.
You don’t need to be a professional, but you would greatly benefit from learning investing basics. This will help you understand how and why retirement planning is so important. It will also enable you to make the best decisions for your money.
The book I recommend to get started is I Will Teach You to Be Rich by Ramit Sethi. It's a very easy to understand book that taught me a lot about investing (even though there's more in it besides investing!)
10. Consider hiring a professional to help you invest
Finally, consider hiring a financial professional to help you with your investments and financial plan. The most important point here is to make sure you hire the right person.
The best advice I have is to make sure you hire someone who is a fiduciary. This means the financial professional has a duty to act in your best interest. This may not seem like a big deal, but it is. Learn more about fiduciaries HERE. You can simply ask the professional if she is a fiduciary and she will tell you.
If you hire someone who is a good fit, it can be a life-changing experience for your family.
Which Money Rule do you need to focus on?
Natalie Bacon is the blogger behind NatalieBacon.com. Natalie is a blogger, financial planner, recovering attorney, and personal development junkie. Things she loves include, God, coffee, wine, and podcasts.
Disclosure: Some of the links in the post above are affiliate links. This means if you click on the link and purchase the item, I will receive an affiliate commission. Rest assured, I only recommend products or services I use personally and believe will add value to my readers. Read my full disclosure policy here.
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Yup, this pretty much sums up the steps needed to start building a financial future.
We paid our debts and started thinking about savings and an emergency fund way before we both turned 30. However, we would probably still be in debt right now if it wasn’t for the rough times a few years back! A good financial scare can do wonders for someone in their 20s 😀
Financial scares are never fun at the time, but you learn big lessons from them for sure! You always hope that the last lesson you experienced is the last one you’ll have to learn. 🙂 {It rarely is though 🙁 }
An emergency fund is crucial at any part in life, especially in your twenties. I’m only 24 and have found that I’ve needed money for health and car emergencies.
Absolutely!
You didn’t tell readers to buy disability insurance LTD which hardly any employer offers. Long-Term Disability insurance counts far more than anything else. Big fail in NOT listing this under the insurance coverage everyone needs to have.