When you’re in your 30’s, your financial responsibilities are bigger and more important than ever.
While most of the personal finance goals during your 30’s are just a continuation of those you hopefully started in your 20’s, this decade of your life brings financial challenges that probably didn’t exist in the previous one. If you’re starting a family and buying a house for the first time, you should take these new responsibilities into account when managing your personal finances.
It’s time to really take charge of your life and financial security. You have to think about saving for your children’s education, increasing your retirement savings and even getting your estate planning in order.
This is the second part in a series of personal finance goals you should aim to have for every decade of your life. Today we take a look at 10 financial goals for your 30’s.
1. Review your budget
Review the budget you created in your 20’s and adjust it to any major life changes in your 30’s, such as starting a family or a business. If you’re having your first child, you might have to cut spending on going out and spend more on baby supplies. Also, go through your debit and credit card statements to see where your money’s going and how much you have left before the month’s end. This’ll help you know which expenses are costly and what you need to cut back on so you have more money left over at the end of the month.
2. Save more money
You can save more money by spending much less than you earn, cutting back on non-essential expenses such as alcohol and making your own meals at home. You should also consider saving 25-30% of your income after tax every year, not spending more than you planned to spend, and trying the DIY version of something you may want to buy.
3. Pay off non-mortgage debt
If you still haven’t paid off your credit cards or student loan, stick to your debt repayment plan throughout your 30’s. You can further reduce your debt by living frugally, earning extra money through a second job, and diverting most of your income and savings to paying off your debt. You can start by paying off the smaller debts first before tackling the bigger debts, as the satisfaction you get from eliminating a debt completely can give you the motivation to keep paying down your debt.
4. Build up your emergency fund
In your 30’s, when your income and expenses go up and you’re most likely to be married and have kids and a house, you should save at least 6-12 months’ worth of basic living expenses. This is very important in case you lose your job or get into an accident and need time off work. You can use the money in your emergency fund to continue supporting yourself and your family while you rest or look for another job. You can also use the cash to pay for other emergencies.
5. Review your insurance policies
If you’ve bought a new house or car, got a new job or had your first or second child, you’ll need to renew your insurance policies. These include income protection insurance, health insurance, life insurance, car insurance, and home and contents insurance. Even if your personal situation hasn’t changed in your 30’s, you should periodically review your insurance policies to ensure you’re still receiving the best deal. Consider comparing insurance policies, rates, benefits and premiums.
6. Increase your retirement savings
Save 15-20% of your gross income for retirement if you want to have plenty of money and live comfortably in your golden years. Every time you receive a pay raise, increase your personal contributions to your retirement account or super fund. When you get a new job, roll your funds over to another retirement plan instead of withdrawing them. Consolidating your old and new super funds into one account can reduce your costs and help you save more for retirement.
7. Save for your children’s education
Higher education in Australia can be quite expensive if you choose a private school, costing tens of thousands of dollars per year. For this reason, it’s important that you start saving for your child’s high school or university education as soon as they’re born. Set up an education savings plan (ESP) account where you get to save for the future education expenses of your child without paying tax on the interest earned. Make regular monthly contributions to the account.
8. Diversify and rebalance your investments
If you haven’t already done so, diversify your investments to build wealth over the long term. It’s best to invest mostly in stocks as they have greater potential for long-term gains, but also invest in mutual funds, exchange-traded funds, target date funds and index funds because they offer low costs and are simple and stable. You should also rebalance your investment portfolio occasionally to ensure that you maintain your chosen allocations – this’ll make you buy low and sell high.
9. Advance your career
It’s time to apply the marketable skills you developed in your 20’s to increase your income in your 30’s. You can consider finding a higher paying job that matches your skills or taking further education (e.g. a specialised tertiary degree or online course) to help boost your career. You could even move to the city to find more job opportunities in your field.
10. Get your estate planning in order
When getting your estate planning in order, you’ll need a will or trust. This allows you to determine how your estate (e.g. your house, investment accounts and other assets) will be divided and disbursed when you pass away, as well as who’ll raise your children. You’ll also need a living will and a healthcare proxy or durable power of attorney to help your loved ones manage your care and finances if you become incapacitated.
If you need help with managing your debt so you can continue to build and protect your wealth, contact Credit Counsellors Australia today We offer debt solutions, debt help and advice tailored to your individual circumstances to ensure you obtain financial stability and success.