Today we want to look at the 15 best financial decisions you can make in your 30s. How many of these have you already done?
- Own a home instead of rent - Real estate is historically a fantastic investment and a built in savings plan through homeowner’s equity.
- Open a 529 college savings for your children - Plans differ by state, but essentially a 529 plan are college savings accounts with tax-savings incentives.
- Have a written budget
- Have a written financial plan
- Pay down debt - A good rule of thumb is to start with the credit cards, they often carry the highest interest. Then move on to any personal loans, car loans and medical debt, then student loans and mortgage debt.
- Open a Roth IRA - Start building a retirement account with after tax dollars.
- Open a Traditional IRA - Start building a retirement account with pre-tax dollars. Mixing this with a Roth IRA gives you a good mix from a tax perspective as you work towards a retirement nest egg.
- Read a Total Money Makeover by Dave Ramsey - A great book to get you started on a journey towards paying down debt and building wealth.
- Contribute to your employer's 401(k) Plan - You’ll want to at least take advantage of any employer matching. Beyond that, retirement saving is highly personal and can take on different forms. As a rule of thumb, try to save 15% of your income. If your employer matches 4%, for example, you should try to save 11% on your own. If that sounds like a lot, consider a ladder approach where you start with setting aside 5%, then increase it by 1% every 3 months until you get to 11%. This way the impact isn't so huge right off the bat!
- Automate bills. No need to face late payments, or take up time to pay bills each month. Technology can take this off our plates and make bill paying stress free, just be sure you know when those bills are coming out of the account!
- Use credit cards responsibly. Credit cards are not inherently evil, they can help you build a credit score which will help you obtain better mortgage rates. But using them responsibly by paying the balance completely off every month is imperative. A good sign that you are not living within your means is when you are building credit card debt in order to meet your obligations.
- Automate your savings contributions. Apps can help with this. Or talk to your accounting department and see if they’d be willing to direct deposit a certain amount of your paycheck into a separate savings account.
- Determine you and your spouses money personality so you can be on the same page - Check out this article written by Emily Biehler
- Set aside 3-6 months of income as an emergency fund. If you were to lose your job, how would you make ends meet until you found a new position?
- Meet with a CERTIFIED FINANCIAL PLANNERTM professional. Of course we were going to end with that! Meeting with a CFP® professional means you’ll be meeting with someone with your best interests in mind, to help you develop a plan to help you reach your financial objectives.
Life is complex, finances are challenging, but following these tips can put you on a solid footing as you grind through your working years. If you’re already following these tips, keep it up!
Have any more tips you’d add to the list? Let us know, we’d love to hear!