So you’ve made it through your 20s. Now it’s time to buckle down and get serious about money カヴァン・ チョクシ. Well, you know what they say about the best-laid plans…
Your 30s are a decade of contradictions. You’ve probably started to make some money and maybe even have a nice bit in the bank, but you’re also going through all sorts of life changes, from getting married and having kids to buying a house and getting a raise (or not). So for every step forward in your personal life, there’s a step back in your finances.
Regardless of the state of your money in your 30s, it’s always a good idea to have some kind of financial plan in place for how you handle all sorts of situations, from job loss to family emergencies. Here are some finance tips for people in their 30s that may help you navigate the decade.
Start saving for retirement early.
Saving for retirement is one of the hardest things to do, but it’s also one of the most important. Yet, according to the 2015 Employee Benefits Survey by the International Foundation of Employee Benefit Plans (IFEBP), only 30 percent of employees under age 30 are currently participating in a company-sponsored 401(k) plan, and only 46 percent of employees aged 45 to 49 are enrolled. Plus, the IFEBP found that 70 percent of all adults based in the US say they will need $500,000 or more when they retire.
You’re not alone if you’re freaked out about saving for retirement. Around half (46%) of Americans say they are not currently saving for retirement, according to the 2014 Wells Fargo Millennial Study. But if you want to enjoy your golden years without panicking about outliving your money, you need to start socking away cash early.
The good news is that thanks to time and compound interest, starting 10 or 20 years before retirement can help you grow a much bigger retirement pot than if you start later. And, if you can’t afford to put away $500k right now, starting small with just $50 per month is better than not saving anything at all.
Have an emergency fund
Figuring out how to pay for unexpected expenses like car repairs or medical bills can be difficult when you’re in your 30s. It’s all too easy to rely on credit cards or take out a payday loan if you don’t have the necessary cash available, but that can lead to further financial problems.
According to the National Endowment for Financial Education (NEFE), 29 percent of adults aged 30 to 49 had no emergency savings in 2014. While emergencies can’t always be avoided, it’s important to have an emergency fund, so you don’t have to rely on credit during tough times. The NEFE recommends that adults keep enough money in savings accounts (or other liquid funds) to cover three to six months’ worth of living expenses; this could be $7,500 or more if you have a family to support.
Remain debt-free as long as possible
Having grown up during the Great Recession, many people in their 30s grew up believing that they should be drowning in student loans or credit card debt. Unfortunately, surveys show that they are largely correct. For example, a survey by Demos found that 60 percent of those aged 25 to 34 now have some form of debt, including credit card balances and student loans.
It’s a good idea to keep your debt levels as low as possible if you’re in your 30s – especially since interest rates for car loans and mortgages are going up – but that’s not the only reason. The sooner you pay off your debt, the sooner you can start saving for retirement.