Your 30s are the time to focus on your financial self-care and improve your financial wellness. We've got five tips to help set the pace for your decade.
Quick time travel — do you remember what you were doing ten years ago this month?
If you're like most 30-somethings, you might guess working, if you can even remember at which job. Maybe you were doing a stint back at your parents' house. Like many millennials, you might have been feeling broke. You may have even been broke. Personal finance meant only that your Visa card was well worn.
Quite possibly, you didn't realize that your financial wellness wasn't even a thing, much less that it was a long way from "well."
That's the great part of getting into your 30s: life takes shape. Your jobs morph into a career. You have a monthly income, not just a paycheck. You can look back on the ambiguity that was life in your 20s and realize that now you are really an adult. You may have thought you were finally a grump in your 20s, but your third decade is when life gets real. And it gets good.
Your 30s are also when your financial priorities mature and evolve. You even begin to think ahead — perhaps even take a long glance down the road — and ask what priorities should be on your radar in the next decade of life?
More good news: We've got five tips to help set the pace for you this decade. Whether you're well into it, or just inching close to it (if you round up), your 30s are the time to focus on your financial self-care and improve your financial wellness.
1. Manage your debt
Still more good news: Debt isn't always bad. It can help you buy a car or a home, or pay for college. Make this the decade you manage your debt. Being debt-free is not the same as financial freedom. One is owing nothing. The other is owning your debt — being in control of your debt, your payments, and your credit score, and using it to reach your financial goal.
Your credit card debt
You likely don't want to be reminded that you were close friends with your credit card in your 20s. But believe it or not, that friendship doesn't have to come to an end. But like your other friendships, it does need to mature.
Having a credit card is not a bad thing. Having credit card debt, however, can be anywhere from 🙁 to 💩. Get it paid down.
That may not come as a surprise, but this will: Don't get rid of your credit card. One of the most important pieces of your credit history and your credit score is the length of your credit history. Keep your credit card account open after you pay off the entire balance. When you use it, pay your balance in full each month. A good credit score is your friend. Minimum payments are not.
Student loan debt
Many people in their 30s are still paying off student loan debt. Since student loans generally have a lower interest rate, it often makes sense for people to pay off higher-interest debt first (like credit cards). If you've Googled tips on how to pay down debt, you may already know this approach: the avalanche method.
The other approach — paying off your smallest debt first — is called the snowball method. Either can work, but with this debt, you take care of those pesky BNPL payments, then your credit card balance, and then you can turn your attention to your student loans and start paying down that debt more quickly.
Young people think you need to eliminate all debt. (Note: You are still young, so keep that in mind.) You are going to have more debt in your life, maybe even in this decade. The tip here is to pay it down, pay ahead when you can, and make sure you are using the debt to build up your wealth, improve your credit, and acquire the truly good stuff in life.
2. Take steps toward successful home ownership
This is the good stuff. It's not just that you are buying a home, it's that you are investing in your future.
In 2015, the average first-time homebuyer was 33 years old, according to Zillow. Guess what it is today. Go ahead, guess.
It's still 33, according to a report from the National Association of Realtors. Don't panic and think you are behind the curve here. There are some reasons why not all millennials are buying homes.
Yes, part of it is student loan debt, but that's likely not news to you. The other truth is that not all millennials want to buy a home. You might be waiting until you get married or start a family, two more decisions that millennials will get to it when they get to it, and that will be when they are darn good and ready — not when older generations tell them they should. Sound like anyone you know?
Most people spend about six years paying rent and saving toward a down payment before making a home purchase. Plus, you'll need to keep your credit healthy to ensure you can get the best possible interest rate on a mortgage when you're ready to buy a house. You already know that, too, and you're on it.
One more thing to do as you prepare to become a homeowner: calculate your net worth. It will help you track and watch how these first two tips are impacting your personal capital (aka, wealth) over time. Check your net worth every few years, if for no other reason than to check in with all the apps and accounts where your money lives.
3. Build your emergency fund
Whether it's a new set of tires, or break in employment, or a new baby on the way, there are oodles of reasons why you need to have an emergency fund. Consider opening a savings account just for this money. It will be easily accessible but otherwise hands-off.
Many Americans have a child while in their late 20s, so by the time you enter your 30s you could have some big responsibilities. What you don't need are financial surprises.
Look at it like this: Your cell phone is a bill you must pay this month. Your rent must get paid this month. A new transmission must be paid as soon as the old one decides it's done being a transmission. That might be this month, too. Be ready for that bill the same way you are ready for the recurring ones you know about.
Set an emergency fund savings goal. Make it part of your monthly living expense. When you have six months banked, put the money into your next savings goal.
4. Save for retirement
Speaking of your next savings goal, here's a tiny piece of financial advice: The best time to start saving for retirement is when you get your first job in high school.
Okay, you might have missed that tip when you needed it, but again you're young (really, truly you are). There is still time to think about the "r" word.
You know, though, most 30-somethings aren't planning to work for this many years and then stop working for all the rest of the years until death. That's how the older generations saw retirement. waiting for your social security check is not part of the retirement plan.
You, however, aren't thinking about retirement in the old-school sense. You plan on living your life, and you just might be working for some of those years and not working at other times. There's no fixed timeline for you.
But the only way to live some of those years without working is to save while you are working. That's now. Your 30s are when you begin to solidify your career and begin to earn more money. As your earnings increase, so should your retirement savings.
Yes, you also will have new financial responsibilities, but given how young you are, if you can earn decades worth of interest on the money you set aside now, Future You is going to love 30-something you. max out your 401k contributions. Open an IRA. In short, pay it forward to yourself and do it now.
You may already have diversified investments, including crypto, but if you're wondering how your dividends measure up, ask for financial advice from an expert. Your employer-sponsored retirement plan may include advisors with whom you can discuss your financial planning efforts for the near future.
5. Begin saving for your child’s college education*
It may feel like you just put those college loans behind you and now you have to think about the next generation of how to pay for college. In a perfect world, you should open a college education fund for your child the day you bring him or her home from the hospital, maybe even before that. If you haven't already, it's time to do so.
Look into a 529 savings plan that can help grow your child's education fund and learn about other options for saving for a college education. Again, this is an ideal time to seek financial advice from experts. Your child may not want to attend college, so knowing how to structure your child's savings is equally important to your own.
*Prefer to pass on parenthood?
But wait, if you prefer to live your future without children, there are still plans you should make accordingly. It's not uncommon for people to move in with their children later in life and share expenses — and health care decisions. The money you may be saving now by not creating a wealth management plan for your children should be invested for your own long-term care, regardless of your health today.
Dealing with finances in your 30
For most people, your 30s are the years when you really put down roots, increase your earnings, and start building your assets. Taking steps to nurture your financial wellness. Take wide-angle views and close-up looks at your financial situation.
Create and cement smart money management into your lifelong habit — one that will continue to pay off well into your retirement no-longer-working years. And if you want to think ahead to your next decade, it doesn't make you any older, but it can make you financially smarter.