Your 30s can be tough. It is easy to feel like you are behind the 8 ball. You are through your 20s where you are still trying to figure out what you want to do, not to your 40s where things are more established. In our 30s, many of us are still learning our way. Maybe you have young kids at home, you’re trying to support the family, keep everything afloat. Maybe you are still living the single life, working hard but between the mortgage or rent payment, healthcare, insurance, car loan and student loans combined with the fact that you are still trying to prove yourself in your career, trying to climb the corporate ladder, you feel like the deck is stacked against you.
Here is a litmus test to see if you are on track financially. If you can't check all of these boxes, don't beat yourself up! Instead sit down and put together an action plan, listing the steps it will take to get there.
1. You’re managing your student loans
Student loans are a necessary evil for many Americans. Many young people seek to give themselves a better future through leveraging student loan debt. While we generally discourage debt of any kind, the reality is, sometimes it is unavoidable. Not everyone has the ability to pay their way through college.
No one expects you to have your student loans payed off in your 30s, but you should have a long term plan in place for managing your student loans so they don’t sink you. Government issued student loans offer many repayment options including income-based repayment plans so you’ll never have an excuse to allow the student loans to overwhelm your budget. Other professions such as government jobs or teaching jobs may allow for loan forgiveness after 10 years. Forbearance might also be an option if you are not working.
2. You’ve started your retirement savings
Ideally you want to be setting aside 15% of your income, as a rule of thumb (although it certainly depends on your retirement goals). If you aren’t there yet, don’t worry! Steps can be taken to get there. Does your company match your retirement plan contributions up to a certain percentage? Start by maximizing this benefit. You don't want to be leaving free money on the table. Then increase your plan contributions by 1% every 6 months until you get to the 15%.
3. You have a budget in place
Having a budget is simply determining your income and expenses every month. Putting a name to every dollar you spend. The purpose of a budget is to keep you on track with your finances, to ensure you are living within your means, to keep you and your partner on the same page financially and to reduce stress that money creates. If you know you have a budget for clothes, when your spouse splurges on a new shirt, it doesn’t create the tension as it might if you hadn’t budgeted for it. It gives you more freedom to make every day financial decisions without the guilt that can come with spending money.
4. You’re not accumulating credit card debt
The average household credit card debt is around $15k. Credit card debt is one of the most expensive kinds of debts out there with interest rates often at 15% or higher. It accumulates quickly and is very difficult to make disappear. Some people stay as far away from owning a credit card as possible and this might not be a bad idea!
When it comes to money it can often feel like we have no control. Your income is what it is, your expenses are what they are. However, these 4 items are all within your control and can provide a litmus test to ensure you are on the right track. If you failed one of these items, it is never too late to get back on track! Just keep plugging away, working hard, and practicing self-discipline. You’ll thank yourself for it!