Following up with this lifetime of savings series, we have talked about how to save money in your 20s and how to build solid foundations for your adult financial life. Now let’s see what should be tackled in your 30s.
Make up for your 20s
Don’t beat yourself up. You have made mistakes in your 20s, now it is time to pay them off. Put all the money you can towards your consumer loans, student loans, credit card debt, etc. And once you are done, try to keep throwing that same amount on your savings account. Now that you make more money, it should be easier to get rid of your debt quickly.
Buy a house
Buying a house is not for everyone, and sometimes it makes more sense to rent than own, even in your 30s, but investing in real estate is a great way to build wealth. I didn’t want to buy my main residence in my late 20s-early 30s as I knew I wouldn’t live there forever, not even for the next 10 years. So instead I chose to invest in a college town, where I could easily rent the place to students once I decided to leave. The rent creates an extra income while the principal is being repaid by said rents as well.
If you know you will establish yourself in a city where the cost of real estate is reasonable, you should try to buy a place and start building some equity. It is like a forced savings account, every month, you repay a little bit of the price of the house, and will own it in a few decades, hopefully before you retire.
Get a new job
If you have evolved slowly but surely at your job for the past few years, it is time to apply for a new job. That is your best chance to get a better raise than the usual 3-5% per year. So brush up that curriculum and start applying. Or look for better opportunities within your company.
Bank the raise
In your 30s, you are probably living with your other half, maybe even with your children. Still, they are not evil teenagers always asking you to buy them the last gadget and fancy clothes. So if your family was living well on X and you were just promoted to Y, try to bank (Y-X) for a little while and invest the money until retirement age. Just make an automatic wire to savings on pay day and pretend the money doesn’t exist. In your 30s it is easy to jump from job to job with a 10-20K raise each time, so it could mean big savings.
Adjust the family budget
Now that you are a couple or a family, it is time to discuss finances with your partner. Set your long term goals, review and merge your budgets and your saving plans.
Money is often the reason for divorces and fights, so communication is key there. Sit down with the last bills and statements and see where you want to be in 5, 10 and 25 years.
Max out company match and tax free savings
At that point, you should be able to take full advantage of your company match at work, and to max out your tax free savings accounts each tax year. You can still use your ISA later on if you need cash, although you won’t be able to fund it back, once your used it, the allowance is gone!
Those carefree days are over, now that someone else, and maybe little ones, depend on yourself and your income. It is time to think about life insurance, disability insurance, and of course, home insurance, both building and contents insurance. You should also review your healthcare plan to check conditions about maternity and prenatal care.
Invest for your kids
Your 30s are the time to stop thinking about you and start thinking about your kids. Did you know that if you save £1 a day from conception to college, you could make your kid a millionaire by the time he/she retires? Check the link for the exact math, but that is pretty cool. Your 30s are the time to start a college fund, a car fund, a whatever fund for your kids, so you can afford to kick them out of the house when they turn 18 🙂 just kidding.
Doing all this should help you keep building a solid ground to enter your 40s. See you next time to talk finances and saving money in your 30s.
What would you add to my list if you are over 30?