30 Things Every 30-Something Should Know About Their Money
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Your 30s are often filled with major financial and personal milestones such as getting married, having kids and buying your first home. This is also a time when you may get aggressive about paying down student loans and other debts. And although retirement seems far away, the choices you make during this decade can affect you when that time rolls around.
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With all of that in mind, here are 30 things every 30-something should know about their money.
1. Get a Clear Picture of Your Finances
“Do a ‘financial 360’ in your 30s, meaning, take a look at your financial picture, your net worth and your retirement accounts, and see where you are so you can plan for your next 10 years and beyond,” said Ramona Ortega, founder and CEO at My Money My Future.
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2. Set Up Retirement Accounts If You Don’t Already Have One
“If you don’t have a financial plan, get one, and make sure you at least have a retirement account and a Roth IRA,” Ortega said.
3. Think Carefully About Every Dollar You Spend
“Before spending, realize that every $1 you spend today could be worth $10 in retirement,” said Barbara Friedberg, investing expert and owner of Robo-Advisor Pros. “Consider whether that $200 gadget is worth sacrificing an extra $2,000 in retirement.”
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4. Don’t Throw Free Retirement Savings Away
“Contribute enough to your workplace retirement 401(k) or 403(b) to get the employer match,” Friedberg said. “Even better, contribute the maximum amount allowed by law if you can swing it, and your retirement will be covered.”
5. Buy Life and Disability Insurance
“If you have kids, get inexpensive term life insurance and disability insurance (if not covered at work),” Friedberg said. “This way, your family is covered for the unexpected.”
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6. Eliminate Credit Card Debt
“No credit card debt — no exceptions,” Friedberg said. “If you have it, pay it off. If you can’t afford to pay in full, you don’t need it. Debt is the best way to slow up or halt your wealth accumulation.”
7. Buckle Down on Paying Off Student Loan Debt
“People in their 30s should be doing absolutely everything they can to pay down all debt, including student loans,” said Chalmers Brown, former CTO at Due. “Start with unsecured debt, such as credit cards, and keep going until it’s all gone.”
8. Track Your Saving, Spending and Investing
“Use a money app like Stash or Acorns to keep track of your money, and add to your saving and investing funds,” Friedberg said.
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9. Consider Starting a Business
“You’ll never make life-changing money at your day job,” said Steve Chou, founder of the blog My Wife Quit Her Job, a resource for starting your own online store. “By starting a side hustle, you can make money on the side and work towards being your own boss. Plus, you can expense many of your purchases related to your business and save money on taxes.”
10. Invest Now To Be Ready for Retirement
“If you’re scared of investing, start with an S&P 500 index fund,” said Derek Sall, owner of LifeAndMyFinances.com. “It’s diversified and has historically earned 10% each year.”
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Bob Lotich, certified educator in personal finance and founder of SeedTime.com, recommends setting up an automatic $300 monthly contribution to an S&P 500 index fund.
“With an automatic $300/month contribution, you could cross the seven-figure mark in your 60s, assuming a 10% average return,” Lotich said. “But with each passing year as you get closer to retirement, far larger contributions are required to get you to a million-dollar nest egg. For example, if you wait another 10 years to get started (using the same calculations as the example above), you would only have about $400,000 instead of $1 million. When it comes to investing for the long term, time is the underrated key to performance, so do yourself a favor and get started as soon as possible.”
11. Don’t Take Financial Advice From Your Friends
“Most of your friends are broke and know nothing about money,” Sall said. “Don’t listen to their advice, and don’t let them criticize you when you do smart things with money.”
12. Invest In a Home as Soon as You Can
Buying a home is “an escalator to wealth,” David Bach, the bestselling author of “The Automatic Millionaire,” told CNBC. “If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter.”
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13. But Don’t Overspend on Your Home
“Don’t go house crazy,” Sall said. “Typically, houses are terrible investments. They earn roughly 3% per year. The more house you buy today, the poorer you’ll be in retirement. Instead of buying the monster mansion, buy a modest house and live there forever. Then, simply invest the difference. It’s so simple, but very few people are smart enough to do this.”
14. Make Extra Mortgage Payments
“To get to financial freedom sooner, make one extra mortgage payment a year and your 30-year mortgage will be done in 23 years,” said Ted Jenkin, CEO and co-founder of oXYGen Financial.
15. Maximize Your Savings
“The single greatest asset a 30-something has is time to compound wealth,” said Todd Tresidder, financial coach at FinancialMentor.com. “That means the most important thing is to maximize savings now so each dollar has longer to grow. Focus on increasing your earning capability through career enhancement while controlling lifestyle creep so that you expand the gap between earnings and expenses, resulting in ever-increasing savings. As your savings grow, then grow your financial intelligence to improve your investment skills. But for now, it’s all about maximizing savings.”
16. Consider Non-Traditional Investments
“It’s not clear that the equities markets’ superior historical performance will continue in a future where alternative investments are easier to access than ever before,” said Brian Martucci, personal finance expert at Money Crashers. “Cryptocurrency, real estate and other non-traditional investments can help you diversify away from stocks and bonds, whose values are closely correlated.”
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17. Have a Robust Emergency Fund
“To cover unexpected bills — like a prolonged hospitalization — or unexpected job loss, you should have enough in the bank to comfortably get you through at least six months at your current rate of spending,” Martucci said. “More is better. If you’re behind, prioritize building your emergency fund today. Those alternative investments can wait.”
18. Consider Your Partner’s Finances Before Marrying Them
“When you marry someone, you marry their financial history and decision-making skills,” said Misty Larkins, president at Relevance. “Far too many overlook this important character trait entirely. If your partner spends lavishly where you prefer to save, consider setting up special accounts so you can at least track where the money goes.”
19. Look at Time as Money
“Treat your waking hours as an asset and assign a dollar value to how you spend your time,” said Yenn Lei, lead software engineer at Emotive. “Oftentimes, it can be enormously eye-opening to engage in a few weeks of meticulous time blocking, journaling and after-the-fact assessment.”
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20. Put Your Bills on Autopay
“Embrace bill-paying automation when deciding how you plan to manage your finances,” said Steve Gickling, founder of ETLrobot. “Many people say they don’t like feeling ‘out of control’ of their checkbook, but I’ve found the opposite to be true. Knowing in advance that a creditor is going to tap your account for a certain amount brings more control to spending, not less.”
21. Stop Buying All of the Latest Gadgets
“Don’t fall into what I call the ‘nonstop tech trap,'” said Stephen Dalby, founder of Gabb Wireless. “Hardware and software developers are constantly adding new and exciting features to their products. I know what it feels like to hear that inner voice saying, ‘I gotta have that!’ — but I’ve also learned to wait 72 hours to cool down before any upgrade.”
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22. Live Below Your Means
“Everyone hears this piece of financial advice, but so few actually adopt the practice of living below their means,” said Kimberly Zhang, editor-in-chief of Under30CEO. “It’s been my observation that nothing drags a person down more than struggling to pay the bills. When you force yourself to live below your means, you invest in a sustained peace of mind.”
23. Upgrade Your Auto Insurance
“Always get uninsured/underinsured motorist insurance in addition to your auto insurance,” said Christopher Adamson, co-founder and partner at Adamson Adhoot LLP. “It doesn’t add much to the cost of your premium, but it’s invaluable if you get in a collision with someone who doesn’t have insurance, or has less coverage than your UM/UIM policy.”
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24. Don’t Feel Guilty About Enjoying Your Money
“Wanting to travel or buy nice things doesn’t mean that you’re bad with money,” said Marissa Anwar director at Darling Escapes. “You just need to make sure that you’re being responsible and saving for things properly. There’s no reason to wait until you’re older to do those things.”
25. Negotiate Your Salary Whenever You Are Given the Opportunity
“Asking for $55,000 instead of $50,000 early in your career could amount to $600,000 over 40 years,” personal finance expert Farnoosh Torabi wrote on Oprah.com.
26. Keep Increasing Your Retirement Contributions
“The next time you get a salary increase or bonus, dedicate some of it to retirement savings or other investments — before you get used to having the extra money,” said Marcy Keckler, vice president of financial advice strategy at Ameriprise Financial. “And if your employer’s retirement plan offers an automatic increase option, consider signing up for it to put savings increases on autopilot, with annual step-ups in your contribution rate.”
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27. Get on a Clear Career Path
“By the time you’re 30, you should have either ‘made it’ by working in a career you enjoy or are on the path to making it by either going back to school or finding your way to your ideal career,” said Sam Dogen, founder of Financial Samurai and author of “How To Engineer Your Layoff And Walk Away With A Severance.” “If you’re still unsure about what to do at age 30, then you must buckle down and choose. Have a heart-to-heart conversation with a mentor, parent or best friend.”
28. Write Your Will
“These documents are not just for old people,” Lauren Locker, a financial planner in Little Falls, New Jersey, told Kiplinger. “They are critical to your life planning and well-being.”
29. Think About How You Will Pay for Child Care and Education
“Consider how you’ll deal with childcare and education if you decide to and are able to have children,” said Julie Rains, writer and publisher at Investing to Thrive. “There are many ways to approach this challenge, [including] finding an employer with onsite child care, moving next door to grandparents, sharing a nanny, or working different times of the day and sharing child care responsibilities with your spouse. You may even be able to work for a local university and receive free (or reduced) tuition. Evaluate costs and quality of life for everyone.”
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30. Seek Professional Financial Advice If You Need It
“When people get sick they go to a physician. When people get into legal trouble they go to a lawyer,” said Robert Johnson, professor of finance at Creighton University’s Heider College of Business in Omaha, Nebraska. “Yet people somehow believe that they can navigate the complex financial markets without the assistance of a professional.”
Cameron Huddleston, Gabrielle Olya and Georgina Tzanetos contributed to the reporting for this article.
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