What’s the Best Way To Use Your Paycheck in Your 30s?
Written by
Cindy Lamothe
Edited by
Ashleigh Ray
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Your 30s is one of the most important decades when it comes to building a strong financial foundation.
It’s also when you’re more likely to struggle with finances, according to experts, as you’re likely attempting to balance career advancement, family responsibilities with personal aspirations.
This is also when you have a consistent paycheck and can begin laying a solid financial foundation for the future, said Nathan Richardson, finance expert and founder of Complex Search.
If you are in your 30s, here are some of the best ways to spend your money.
Make an Emergency Fund
Making an emergency fund is one of the first things you should do with your paycheck in your 30s, experts say. Your fund should ideally have enough money to cover your living expenses for 3-6 months.
“This will come in handy if you have any unexpected expenses or emergencies, such as a job loss, a medical emergency or major repairs,” said Richardson. “Setting aside a portion of your paycheck for this fund on a monthly basis is critical for financial stability.”
“Imagine a sturdy fence protecting your garden from unexpected storms,” said Linda Schroder, real estate investor and owner of Cash For Houses. “Similarly, an emergency fund acts as a financial fence, safeguarding you from unexpected expenses like job loss or medical emergencies.”
She says this financial safety net will give you peace of mind, knowing you have a cushion to fall back on if something goes wrong.
Repay High-Interest Debts
“Being in your 30s means you likely have a decade or more of work experience under your belt, which may have allowed you to accumulate some debt,” said Shaun Martin, real estate expert and owner of We Buy Houses In Denver. “If you’re carrying credit card balances with high interest rates, it’s important to prioritize paying them off as soon as possible.”
He suggests one strategy to use is the snowball method where you pay off your smallest debts first and then use the money you were allocating towards those payments to tackle larger debt
“This method can provide a sense of accomplishment as you see your debt decrease and motivation to keep going.”
Similarly, Schroder recommends thinking of high-interest debt as pesky weeds that choke your financial growth.
“The sooner you eliminate this debt, the less you’ll pay in interest over time, freeing up more money for savings and investments,” she explained. “Be like a diligent gardener, aggressively weeding out high-interest debt. Consider using a debt consolidation loan or balance transfer offer to lower your interest rates and make debt repayment more manageable.”
Make and Stick to a Budget
Making a budget is essential in managing your finances in your thirties, says Richardson. This will assist you in tracking your income and expenses, identifying areas where you can save money, and prioritizing your spending.
He said, “Maintain your budget and avoid unnecessary expenditures.”
Pay Yourself First
Schroder says you should prioritize saving by automatically transferring a portion of your paycheck into a savings account.
“This way, you’re sowing the seeds of future financial stability, ensuring you’re consistently putting money aside for your goals, even if you don’t have a lot of leftover funds at the end of the month.”
She recommends aiming to save at least 20% of your take-home pay, but gradually increasing that percentage as your financial situation improves.
Save for Retirement
While it’s important to prioritize your present needs and wants, don’t forget about your future financial security, experts warn.
“In your 30s, you should be actively saving for retirement to ensure that you can maintain a comfortable lifestyle in your golden years,” Martin advised.
A good rule of thumb, he says, is to save at least 15% of your income towards retirement. “This may seem like a lot, but the earlier you start saving, the more time your money has to grow through compound interest.”
He also recommends enrolling in your employer’s retirement plan or opening an individual retirement account (IRA) to supplement your savings.
Schroder agrees, advising to take advantage of any employer-sponsored retirement plans, such as a 401(k), and contribute enough to receive any matching contributions from your employer.
He said, “If your employer doesn’t offer a retirement plan, consider opening an Individual Retirement Account (IRA).”
Invest in Yourself
In your 30s, you likely have several years of work experience under your belt. Investing in additional education, certifications or skills can make you more competitive in the job market, leading to better career opportunities and advancement.
“Your 30s are a prime time to invest in your own personal and professional growth,” said Martin. He suggests using this time to start taking classes or obtaining certifications that will help advance your career and increase your earning potential.
Plan for Big Life Events
“In your 30s, you may be thinking about starting a family, buying a house or pursuing other major life goals,” Martin noted, adding that these events typically require a significant amount of money, so it’s important to plan and save accordingly.
For this reason, he recommends researching the costs associated with these milestones and creating a financial plan to reach them. He added, “This may involve adjusting your budget and cutting back on unnecessary expenses to make room for these big life events.”
Invest in Your Future
“Investing is like diversifying your garden, planting a variety of crops to ensure a bountiful harvest,” said Schroder.
Similarly, she says investing in a diversified portfolio of stocks, bonds and other assets helps grow your wealth over time and can help achieve your long-term financial goals, such as buying a home, funding your children’s education, or retiring comfortably.
“Do your research and understand the risks involved before investing, just as you would carefully choose the plants for your garden,” she urged. “Remember, just as a garden requires ongoing care and attention, your finances need regular monitoring and adjustments.”
She also advises regularly reviewing your budget and spending habits to ensure you’re allocating your money effectively, and to adapt your plan as your income, expenses and financial goals change.
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