If you are in your 30s and don’t have a firm grasp of your financial situation, please don’t feel bad. Yes, some of your peers might have a better handle on their money but that’s no reason to beat yourself up. By the time you get done reading this post, you’ll know more about money than 98% of the people in your age group. And once you start implementing these ideas, your feeling of confusion and shame will be a thing of the past. Let’s get crack-a-lackin’
Many people in their 30s flounder because they have a career they don’t love and/or they self-sabotage with the wrong financial behaviors. Why does this happen? Because they aren’t 100% clear on what they want their lives to look like.
In my previous post, I encouraged readers in their 20s to spend time clarifying their life goals. This is a great exercise for you too. Think about the life you want 10 years from now. Then, reverse-engineer to determine what you have to do in order to get there.
Once you are clear about your vision ask yourself if your income and spending patterns are in line with those goals. If not, create a “to do” list and get to work friend.
There is one important caveat. It’s cool to dream big. It’s also important to be realistic. You might have responsibilities at this point in your life that makes it difficult to completely reinvent yourself. Balance is the key Pilgrim.
2. Life Insurance
If other people rely on you financially you probably need life insurance. Ask yourself how the people you love would survive financially if you were hit by a bus. And don’t worry if you are stretched financially. Term life insurance is very inexpensive. It’s probably much cheaper than you think.
Bottom line? If you have a spouse and/or children who depend on you, find out how much coverage you need and get it. End of story.
Need help or have a question about getting on the right path? Ask me a question. I’ll do my best to answer your directly or share my response in a post.
It’s easy for people in their 30s to accumulate debt. Typically your responsibilities and lifestyle expand much faster than your income during this period of your life. Regardless, I want you to look at any debt outside of your mortgage as public enemy #1.
Getting out of debt is simple – but very hard work. It requires sacrifice and commitment. I’ve detailed how to achieve this in previous posts. The most important point I want to stress is that you absolutely must have your entire family behind you in this endeavor. If you all aren’t on the same page the struggle to be debt free will be infinitely harder because the process is going to generate family friction.
Have a few family “pow wows”. Discuss how the debt was accumulated, why debt is a problem and what you are doing about it. Get everyone to buy in to the process of eliminating it and then get rid of that debt as quickly as possible.
If you haven’t started saving money on a regular basis now is the time to start. The best place to do so is with your retirement plans. This is especially true if your employer offers a 401k with a company match. If you don’t have access to an employer-sponsored plan tap into the power of an IRA. Either way, do as much as you can to max out your retirement contributions. This money will accumulate quickly because its tax deferred. Before you know it, you’ll have a sweet stack piling up. Cool.
Once you max out on retirement plan savings, start an automatic savings plan outside of your retirement plans. I love the idea of automating savings because it forces you to do something good for yourself. To get this done, simple contact your bank or investment company. Have them take money out of your checking account at the start of the month (before you have time to spend it) and watch the savings magic unfold.
Don’t waste energy comparing yourself to others. Now is the time to build your portfolio and you just need to focus your attention on that. You are going to do the best you can and nobody can ask more of you than that.
Retirement accounts are long-term by nature. Consider taking advantage of investments that are structured to deliver long-term growth.
For your non-retirement money, make sure you have enough set aside for emergencies first. Next, set up accounts to take care of your mid-term goals like replacing your auto or buying a house. Mid-term goals are probably better served by making less aggressive investments that still provide some growth opportunities. After that’s all taken care of, any money left over should be earmarked for long-term goals like retirement.
If you are in your 30s you still have a ton of opportunity but you have to be very focused. Maximize how you use your time and resources. Don’t allow debt to get away from you and take advantage of the time you have to grow your money by launching your investment program.
Where are you financially? What is your greatest concern? What are your financial priorities right now?