Each decade of your life, there are certain milestones that should attempt to be reached. In your 20s, you are a new adult—trying to find your way in both your career and society. But in your 30s, people are more mature and established. With that, there is more to be obtained.
To make the most financially of your 30s, there are 3 main tips for you to try to achieve:
- Invest at Least 15% of your Income in Retirement
While you are young, it’s hard to imagine that there will ever be a time where you are old and dependent on the hard earnings of your youth. But it happens before you know it. Rather than finding yourself living below what is needed to live comfortably, you need to start saving towards retirement now.
Many employers (if you are a full-time employee) will match to a certain percentage towards your 401(k). In your 20s you might have contributed as much as they matched (i.e.: 2%, 3% or 4% generally), however, in your 30s, you’ll have to increase it significantly. It’s recommended that you invest at least up to 15% towards your 401(k)—whether it’s a traditional one or a Roth 401(k). One way of meeting the 15% is to increase your contribution each time you receive a salary increase or an annual bonus.
Keep in mind that with a Roth 401(k), your retirement money is tax-free, because the money is taxed upfront. A traditional 401(k) is generated by pre-tax dollars. The taxes occur when the money is taken out at retirement. The one that you select is a personal choice.
- Generate 6-Months Worth of Savings
A lot can be said about having savings—and we aren’t talking about just a couple hundred dollars in the bank. You should have up to 6 months of income saved and put into an interest-generating savings account. This will provide a nice cushion if anything were to ever happen at your place of employment. Other things can happen, such as the safety of your home and property being in jeopardy by a catastrophe (such as a fire or burglary), or any other type of critical situation.
The more financial commitments you have (pay a mortgage or have a car loan, etc.) the more you’ll have to consider saving.
- Payoff as Many Debts as Possible
Being in debt is like having a dark cloud looming over you—it follows and impacts what you do and how you live. And while there are some debts that happen that you’ll naturally want to tackle as you can (i.e.: student loans), there are other debts that you should try to do away with as soon as you are able to, such as credit card debt.
If you have a lot of credit card debt, it’ll greatly impact your credit score. You’ll need a good credit score to do things such as purchase a home, vehicle, finance home renovation projects, etc. So a bad credit score is truly detrimental to anything you want to financially achieve. As a rule of thumb, try to keep your credit card balance below 30% of the total available credit limit.
It’s okay to use your credit card to earn points and other perks—as long as you are able to pay it off without accruing debt that you cannot payoff right away.
Author: Oliver Curtis
Hi there. I’m Oliver. I’m just a young boy from the outskirts of… Okay, that’s a lie, I’m not a young boy anymore, although I certainly feel that way at heart.