Your 30s are a very important decade when it comes to shaping your financial future, never more so than for the current generation. More adults are waiting until their 30s to get married, have children and settle into stable careers, which means that critical money milestones are often happening a little later than for previous generations. This doesn’t mean that the newest crop of 30-somethings have fallen irreparably behind, but it does mean that hitting recommended financial goals for this decade has become crucial for many people.
Focus on Relieving Debt
The rising cost of college and the resulting student loan burden means that more and more adults are well into their 30s before they are able to pay off their student debt. Some have also accumulated a certain amount of credit card debt—all too easy when you are just starting out and trying to make a little money go a long way.
It’s important to double down on this debt in your 30s and avoid the temptation to wait until you are earning more money. Most people also take on more expenses when they begin to earn a higher salary, such as buying a house, purchasing a new car or deciding to start a family. If you don’t prioritize debt elimination in your 30s, it can linger for decades as your obligations accumulate.
Increase Retirement Savings
Ideally, you have already started to save for your retirement in your 20s. But even if you haven’t, your 30s are the time to kick your savings into high gear. Affording a comfortable retirement doesn’t just meaning putting aside a good portion of your earnings; it also means doing so from an early enough age that your retirement investments can grow at a healthy rate. Saving 15 percent of your income in your 50s is not the same as saving 15 percent of your income in your 30s, and every decade you wait means that you are going to have to save a higher percentage of your income in order to have a secure retirement.
Sort Out Your Insurance Needs
As we get older, it becomes more and more important to have insurance coverage that goes beyond simple health insurance. Your 30s are a great time to sort out your additional insurance needs and to purchase policies that can shield you from disaster. Those who have spouses or dependents who rely on their income should strongly consider purchasing life insurance, while short-term and long-term disability insurance are wise options for everyone.
Accumulate Emergency Savings
Insurance can’t protect you against every eventuality, and having a robust emergency savings account is important for every adult. Experts recommend having around six months’ worth of salary saved in an easily accessible account, distinct from retirement savings and other investments that may be more difficult to access. You may have started an emergency fund in your 20s, but your 30s are the decade to increase that savings so that is it truly sufficient to help you through a crisis. While six months’ salary is the general recommendation, you may want more than that if you have major expenses that would make it difficult to cut back your spending until you are back on your feet, such as children or a mortgage.
Invest Your Money
After funding a strong emergency account and ramping up your retirement savings, you should strongly consider investing your extra cash. In the long term, investments are a better option for your money than a savings account, since they will yield greater returns. Furthermore, even comparatively “risky” investment options like stocks are very nearly risk-free in the long term. Money magazine reports that, since 1926, portfolios mostly in stocks have never lost money over a 20-year period. While they may fluctuate in the short term, sometimes significantly, stocks earn money in the long term. With plenty of years ahead for your portfolio to weather various ups and downs, your 30s are the perfect time to begin investing.