Welcome to the big 3-0! It’s a milestone year. By now, you’re probably hitting your stride in your career, you might be in a serious relationship, and most of all, you have a better understanding of who you are and what you truly value.
The start of your 30s is also a landmark time in your money life, as you build on important concepts from your 20s. (Read more on those, here.) You’re navigating how to manage a more robust cash flow, combine finances with your significant other, and spend, save and invest in line with what matters to you.
“Look towards the horizon: Do you want to purchase a home or have children?” says Ian Bloom, a certified financial planner (CFP) and the owner of Open World Financial Life Planning in Raleigh, North Carolina. “Depending on the money choices you make, you can either have the future you want or the future that’s handed to you.”
Here, experts weigh in on five concepts you need to master by age 30 to continue setting yourself up for the life you’re dreaming of:
“Research shows that our tendency is to tackle financial goals one at a time,” says Barbara O’Neill, a CFP and a financial management specialist at the Rutgers Cooperative Extension. “But it’s beneficial to work on them in tandem.”
Say your big three goals are chipping away at debt, building an emergency fund, and saving for retirement. A coordinated plan means you can repay what you owe while minimizing fees, cover your back in case of a budget-buster and take advantage of compound interest on investments.
Juggling it all can feel overwhelming, so here’s a game plan: Use a financial goal-setting worksheet to calculate the amount you need to put aside each month in order to achieve your goals by a target date. Then figure out your monthly cash flow (accounting for living expenses), and tweak your estimates if need be. As you get on track, you can add to your list of goals.
By the time your 30th birthday rolls around, you might be settling down with a partner. You owe it to your twosome to find financial harmony. Not only is money a leading cause of friction among couples, with 35 percent citing it as a source of stress, but a new study found that spouses who manage their finances together are more likely to report being satisfied in their relationship.
The secret to making sure money disputes don’t hijack your happiness? Communication. Healthy couples are almost twice as likely as others to report having regular money conversations. “Schedule a monthly meeting where you discuss your cash flow, long-term goals, and feelings about money,” Bloom says.
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As your income rises, so should your nest egg. “Most 401(k) plans allow for an annual automated contribution increase,” says Levi Sanchez, a CFP and founder of Millennial Wealth in Seattle. “If your salary goes up 3 percent, [the administrator] will boost your contribution by 1 to 2 percent.” Take advantage of that offer: If you never see the extra money in your paycheck, you won’t miss it.
Then, make sure your emergency fund is still on par with your lifestyle. “Once a year, review your cash flow and account for cost-of-living increases,” Sanchez says. So, if you buy a home and now have a mortgage and tax payment, your rainy day savings goal should go up accordingly.
Chances are, your salary has risen through your 20s…along with your standard of living, from dining out more often to renting a nicer apartment. While there’s nothing wrong with enhancing your quality of life as your earning power improves, “lifestyle creep” can take a toll. Before you know it, treats you used to consider luxuries start to feel like necessities—and spending can spiral out of control.
“Remember that every decision you make in your financial life has a trade-off: Each dollar you spend limits where the next can be spent,” Bloom says. “This doesn’t mean you shouldn’t have fun, but it does mean you should weigh the consequences of spending before doing so.”
To combat lifestyle creep, regularly go through a few months’ worth of credit card and bank statements. That helps you track down and cut out sources of mindless spending, such as subscription services you don’t use or the food delivery app you overuse.
Newer investors are particularly vulnerable to missteps like panic selling, says Bloom. After all, you haven’t weathered many market ups and downs yet—to see firsthand how your funds can bounce back stronger than ever when the storm has passed. As your investments start to grow, it’s important to learn patience so you can stay the course instead of trying to beat the market.
“Fortunes aren’t built overnight,” Bloom says. “Small actions over time and sticking to a plan is the best way to build wealth.”