In today’s society, it’s easy to get complacent when it comes to your finances. Today, PF Pro contributor, Melissa Hoffman takes a look at five money moves you should make in your 30’s. Don’t put these off until it’s too late, take action now!
While your twenties may have been a time of massive change (and perhaps some massive debt, either in student loans or credit cards), your thirties are the sweet spot: young enough to still have tons of earning potential, and old enough to have made enough mistakes and (hopefully) be more prepared for the life expenses coming your way.
Some things in your 30s will stay constant: building up your emergency savings and making sure you can survive an unexpected job loss or major car repair, saving up for retirement and increasing your contribution rate. However, your 30s bring additional challenges in the form of a spouse who may rely on you, kids you may want (or are currently raising), and buying a house (or maintaining the one you have). With your 30s brings great responsibility, but also great power to harness your maximum potential.
Money Move #1: Focus on your career
By now, you probably have a few years of experience under your belt in your chosen field. Now is the time to evaluate your career track: is this a career you’ll want to stick with for another 20-25 years? If yes, ramp up your exposure to the company. Volunteer for more visible roles, sign up for public speaking classes, and document all of your achievements. If there is a position you want, aggressively pursue it by reading up on the job description and getting some of that experience under your belt. When the position opens up, you’ll already have the exposure and experience to be a seamless fit.
If you don’t like your job, take the skills you’ve mastered over the last few years and shop them around to new companies. Dust off your resume and update it to reflect your new skills, then send it to sectors or employers you’ve heard about and are interested in working for. Don’t feel tied to one location, either. If you don’t yet own a home, open up your search nationwide, or narrow it down to a few different cities you like. Now is your time to maximize your earning potential, so don’t hesitate to apply for many different jobs.
Money Move #2: Ask for a raise
Check salaries on Glassdoor.com to see if you’re being paid equitably. While some companies are more transparent about pay, some are not, which is where Glassdoor.com comes in handy. If you’re friends with coworkers, you could broach the topic of pay, but tread carefully. If you think you’re underpaid compared to Glassdoor’s analysis or your own sleuthing, take a look at your accomplishments and draft up a game plan to ask for a raise.
An employee moving up the ladder who takes on additional work is an incredible asset to companies, and in your 30s, you have enough experience to ask for more. You’re no longer entry-level, so you have much more negotiating power than you may have had in your 20s.
Money Move #3: Shore up your income by side hustling or establishing passive income
If you’ve been reading Your PF Pro for a while, you’ll know that Harry is a big proponent of side hustling to bring in extra money. Whether yours is to pay off debts or bring in extra income, your 30s are a good time to establish some form of extra income generation.
Get started by evaluating your strengths: are you good at Excel and managing databases? Offer your services on Elance.com or network with people who work in your sector. Want a more passive income stream? Consider investing in dividend-paying funds or, if you have the money, consider buying a home to rent out. Being a landlord isn’t necessarily an easy way to make money, but with the right renters, you could have a steady stream of income that will last for decades.
Money Move #4: Get Your Affairs in Order
In your 30s, you may own a house, have a child, or are planning on settling down and expanding your family. Have you looked at your insurance lately? If you’ve had any major life changes, it’s time to review your insurance policy. If you have a spouse and kid(s), it’s imperative you have a life insurance policy set up to take care of them in case of your death. Even if you are not the primary breadwinner, it’s still important to have a life insurance policy to help out with expenses if you pass away. While no one wants to think of that, it’s important to have a policy in place, because the alternative (no money for your family) is worse.
In addition to making sure you have the right insurance (including home, auto, and adequate health insurance for your family), you’ll want to get your estate in order. I know, it sounds so far off: your “estate.” But your estate means a lot of things: if the worst were to happen, who do you want to take care of your kids? If you have your own business, have you set up a trust to make sure your assets are protected? At the very least, sit down with a lawyer and draft up a will. If you have anything of value, you’ll want it protected and bequeathed to people you choose, and not have it tied up in probate forever.
Money Move #5: Become a Finance Ninja
If you still have debt, especially credit card debt, work your butt off to eliminate it in your 30s. By erasing as much debt as you can in your 30s, you’ll free up your 40s to invest the maximum in your retirement accounts. If you don’t have any debt by your 30s (congratulations!), take advantage of company benefits. If your employer matches 401(k) contributions, contribute the maximum to take advantage of the match. Enrolled in a High Deductible Health Plan with a Health Savings Account? Invest in that for a double benefit: reduce your taxable income and save for health related expenses in retirement.
Continue with your current investment strategy, but seek to max out at least one investment account, whether it’s your 401(k), Roth IRA, or traditional IRA. If you haven’t bought a house, consider buying one, particularly if you’re in a city and job you love. It’s a major investment, with its own major expenses, but it’s another way to build equity. A house also includes the intangibles, including having a place to call home and raise your family.
While 30 may not be the new 20, that’s not necessarily a bad thing. A lot of us going into our 30s graduated during the recession of 2008 and are finally starting to get our on feet. Your 30s should be the decade to really get going on life: establishing a solid career or your own business, having a family (whatever your definition of family is – pets included!), and buying a house (or being a traveling nomad). By following these money moves, you’ll enter your 4th decade on this planet already ahead of the game!
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What money moves are you making to enter your 30s successfully, or what money moves did you make in your 30s? Do you agree with this list, or are there money moves you would add?