Managing Money In Your 30s - Make Or Break Time
For those readers in your 30s, listen up! It's make or break time when it comes to managing money. You’re in one of the most important times of your financial life. A lot of major life changes happen in this decade; career changes, marriage, kids, buying a home or starting a business.
How you handle your money in your 30s will have a big impact on how your financial life plays out in the decades to come.
It’s all about finding the right balance between meeting increased present financial obligations while keeping focused on what’s best for the future you. Here are my tips to do just that!
Oh, and if you’re not in your 30s, these tips are still a great reminder of how managing money well can lead to great money outcomes.
Managing money - deal with the financial hangover from your 20s
If you made less than stellar financial decisions in your 20s, don’t wait any longer to focus on cleaning up your financial hangover. If you're carrying credit card or other high-interest debt - get rid of it!
High-interest debt is a ball and chain. It will seriously impact your financial options, which in turn restricts the amount of choice you have in other areas of life.
As long as you’re paying the bank back for stuff you brought months or years ago, you’re financially living in the past.
Make a goal for your 30s to get debt free, knuckle down and do it. It will change your financial future.
Don’t make a big career change without seriously considering the financial implications
In your early 20s, it’s easier to move between jobs or careers, trying different things on for size.
If you don’t have a family depending on you, your financial responsibility is low. There’s time to catch up on a financial blunder due to a poor career choice. (That dream of being an Instagrammer and getting paid thousands of dollars a post didn’t quite work out as you thought).
Your 30s is a different ball game, you want to get really clear on what a career change, or even a job change, will mean for your finances. Not just this week, or this year, but in the years to come.
It’s also time to invest in your professional development. How can you invest in yourself – books, courses, etc – to take your earning potential to the next level?
Managing money well now can have a profound effect on your future. You might be caught up in the now at the moment, but there is a long life ahead of you that you want to enjoy, right?
Focus on investments In your 30s
Whether you’ve been investing since your 20s or are a late financial bloomer and just getting started, now is the time to focus on your investments. There are a hundred and one ways to invest and grow your money in your 30s. Start small, build your money confidence, make bigger investments and slowly but surely expand your portfolio.
Some investing options you could look into include:
- Property investments – either residential or commercial
- Real estate investment trusts (REIT)
- Property related Exchange-Traded Funds (ETFs)
- High-quality dividend-paying stocks
If you haven’t already, this is the decade to set short-term and long-term financial goals. These goals will help guide the kind of investments you choose to achieve each one.
Make the right goals now stick to the plan and you’ll be enjoying the fruits of committing to smart financial action for decades to come.
If you’re planning one, don’t go OTT on your wedding
If you’re saying ‘I do’ in your 30s, don’t make the money mistake many couples do of spending a bomb on your wedding day if you can’t afford it. Fiscal regret is real!
It’s one day! While it’s an important day, it’s not as important as how the rest of your financial life together will play out.
Instead of shelling out $30,0000 on a wedding, do the math on how even half of that amount can be making you money well into the future.
Put $15,000 into a compound interest account at a rate of 4% annual return, add just $100 each month and a decade it will grow to $37,087. Can’t say you’d get the same return from monogrammed wedding napkins.
Buy a home you can actually afford
Like the OTT wedding, it’s possible to get in over your head buying your first home.
This could be the decade you make one of the biggest purchases of your life. Make sure you know how much house you can *actually* afford; not the amount the bank is willing to lend you.
Borrow less than you can afford. If you’re buying at auction, skip being there in person and have someone represent you on the day. Auctions and high running emotions make the perfect storm for overspending on property.
Here are some ways overspending on your home in your 30s will impact your money situation in the years and decades to come
- You’ll struggle to save and invest if a huge portion of your income goes towards mortgage repayments.
- You’ll want to love being at home a whole lot because there will be less money to enjoy holidays and other activities.
- It’s great for young kids to have a lot of space to grow up. But what about when they’re older? If you want to help with things like university fees, your big mortgage payments might not let you put much aside for their future.
Managing money means get insurance
For many thirty-somethings, getting insured is a smart financial move. With the increasing responsibility of a family, mortgage repayments, and possibly starting a new business, the right insurance = peace of mind. Insurance is one of the key requirements for managing money responsibly.
- Life insurance - How would your family cope if something was to happen to you? Life insurance can help them meet financial obligations if they were to lose you - and your income.
- Income protection insurance - If you’re unable to work, this can help ensure that ongoing financial commitments such as the mortgage and household expenses can be paid.
- Business expenses insurance - Can cover the ongoing, fixed costs of your business in the event of their serious illness or injury, keeping the business viably maintained while you recover.
Making a decision about insurance in your 30s could mean the difference between facing future unexpected life events in financial turmoil or with peace of mind.
Andrew Woodward is a mindshift.money accredited money coach based in Sydney who teaches people to take control of their money and invest for their future, simply and efficiently. Sign up for his free weekly money tips and access a free report at theinvestorsway.com.au.