Your 30s are a pivotal time for making smart money moves that can set you up for a secure financial future. You’re probably earning more now, but you also may have bought a home (or are looking to) and taken on more credit card debt along the way. And if your family is expanding, your financial equation just got a little more complicated. Juggling financial priorities is key as life gets richer — and sometimes more challenging — in your 30s.
Understand Your Income
As you move into this decade of your life, your income may increase through merit raises, promotions or shifts to higher paying jobs. With a little more money coming in, it’s time to rethink how you budget. One common approach is the 50/30/20 method — put 50% of your income toward needs, 30% toward wants and 20% toward savings. Recognize that your needs are probably changing — for example, a new car might move from being a “want” to a “need” if your next job depends on having reliable personal transportation. It’s good to periodically reassess your budget and adjust as your income changes.
Get Into a Healthy Relationship With Debt
Whether it’s student loans, a car payment or a credit card bill, it’s not unusual to accumulate some debt by the time you reach your 30s. If you haven’t yet, now is the time to take steps to start paying down those obligations to both improve your credit score and ultimately put more money in your pocket. Consider the “avalanche method” — putting the most money toward the debt with the highest interest rates first to minimize overall interest paid. Alternatively, you might try the “snowball method,” which involves paying off the smallest debt first to free up cash for the next smallest balance, offering a psychological boost as you quickly pay off one of your debts.
Even if you make payments on time, the amount of debt you have overall can harm your credit score. And that can affect your ability to receive a loan for purchases like a home or car, as well as the interest you’ll pay if the loan is approved.
Take the Long View
Whether you already have little ones at home or want to expand your family, you’ll want to also expand your financial planning further into the future. Helping your children launch successfully into adulthood could mean setting up a college fund or a 529 plan, which can offer tax benefits while you save for educational needs. But don’t sideline planning for your own future as you plan for your children’s. Take advantage of your employer-sponsored retirement plan and try to contribute at least enough to receive any matching contributions you’re eligible for.
Your Future Is Now
If your 20s was the decade of firsts — first apartment, first real job, first big relationship — your 30s is the decade of “what’s next.” It’s an exciting time to anticipate the next career milestone, the possibility of purchasing a home with a lifelong partner and preparing for your next stages of life, like possibly sending children to college and envisioning your retirement. Begin crafting your financial plan now to help ensure you’re well-prepared for life changes on the horizon.
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