When you reach your 30s, you can start to make some pretty significant financial changes. Unless you came into a cash windfall in your 20s, such as from a car accident settlement or inheritance, you probably worked during that decade to slowly save money.
You might have also used your 20s as a time to pay off a portion of any significant debt, such as your student loan debt.
This is a time where you’re more likely to make major decisions in your life, like whether or not you’ll get married, where you’d like to live long-term, and what your career is likely going to look like. You might have hopped around in your 20s, but your 30s are the time when you can start to commit to more stability, including financially.
You may decide whether children will become part of the equation for you and if you prefer to buy a home or be a renter.
While everyone might have different goals and make varying lifestyle choices, the following can serve as a general framework for financial goals you should work to meet in your 30s and tips to help you get there.
Reevaluate Where You Are
Before you can figure out where you want to go in your 30s, you need to know where you are. You might not have evaluated your financial situation or goals in a while, but this is a pivotal decade, and it’s important to take an honest look at where you are.
Some things to consider include how much money you have coming in versus going out and how much money you’re saving every month.
Consider your investments and your retirement goals.
If you don’t already have a budget, that’s fundamental to meeting any financial goals, so work on that now too. The budget you perhaps followed in your 20s may no longer suit your needs or lifestyle.
You may have accumulated some assets, so try to understand your net worth. You don’t have to be rich to calculate your net worth. To come up with a figure, add up all of your assets. Your assets are any money you have in any accounts, and material things of value you own, like your home or jewelry. Then, subtract liabilities which are debt you carry.
What you’re left with is your net worth.
A lot of financial experts highlight three general objectives for your 30s when it comes to money.
The first is financial protection. To achieve this goal, you should have an emergency fund that will cover your expenses for anywhere from 3 to 12 months if something happens.
The second general goal is financial security. You’ve achieved financial security when you can cover your mandatory expenses for the entirety of your life without the income from your job. That would mean, for example, that you’ve developed passive income streams, like investing in rental properties.
The third goal is financial freedom. Financial freedom is a point that will come later, when you can live the life you want, without having to work actively, at least as much as you might be right now.
Are You Bringing In Enough Income?
When you evaluate your financial picture as it stands currently, you may realize you have too much going out and not enough coming in to meet your goals. You can fix this by cutting your spending, but it can be better to increase what you’ve got coming in.
Think about your job and whether or not you could potentially find a new job or role that fits your skills and that would pay more. If you’ve become stagnant in the same position you had in your 20s, you might want to consider how things could look different for you if you explored other opportunities.
Career changes are risky, and they aren’t always appropriate if there’s room for growth in your current employer, but it’s something to think about.
Your 30s might be when you start to develop new skills and hone the ones you already have so that you can open up new opportunities for yourself. Become an expert in your field and someone who’s in demand for your skillset.
Make Adjustments to Your Insurance
Often we don’t think about insurance as part of a financial plan, but having the right kind of coverage is a big part of achieving stability and avoiding unexpected scenarios that could derail other financial goals.
Think about the coverage you have, such as car and home insurance. Do you need to change those policies at all to reflect where you are versus where you were when you purchased them?
Do you need life insurance? If you have a family, you do.
Planning for disability is something you should do in your 30s if you haven’t already. If you get hurt or sick and you can’t work for a period of time, you’re going to need to have a plan in place to replace some of your lost income. Then you can avoid taking money from your savings.
Your employer may offer short- and long-term disability insurance, but when it’s offered through your employer, it may only cover half of your income. You can also buy it on your own, and you may be able to find more coverage.
Start Strategizing To Grow Your Wealth
By the time you’re in your 30s, you should no longer feel as if you’re treading water financially. You should be in a position where you can begin to strategize to grow your wealth rather than just keep up with your debt. If you aren’t there yet, you should start with some of the above steps.
If you are relatively comfortable financially, you can begin to learn how to manage good debt versus bad debt. This helps you prioritize as far as your balances and which should be paid first.
Finally, you should also, if you haven’t already, begin investing and saving for retirement.