Once you graduate from college, the next thing that you would be working on is to secure a job for yourself. Those who are lucky enough to join a family business or maybe start a company of their own will be doing pretty much the same thing: establishing themselves financially. Over the years, you will slowly build your finances but it’s perfectly normal to make a few mistakes along the way.
What’s important is for you to establish a savings account, pay off your debts, invest in your family, and increase your retirement funds to secure your future.
When it comes to saving for retirement, it is better to start once you are still in your late 20s all the way to your 30s. If you will only start when you’re already 40 or 50, you might not be as comfortable financially as someone who saved up for retirement a decade or two earlier. Here, we will dish out tips on how you can invest and save for retirement in your 30s. We will also be counting down the concerns that usually affect a thirty-something’s financial decisions.
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Concerns That Affect Financial Decisions When You’re 30
For almost everyone, their thirties is one of the most eventful decades of their lives. It’s when you would be doing quite well at work while still paying off your student loans. It’s when you might be thinking about starting a family while still paying for your first car. It’s when you are riddled with credit card debt while trying to pay for your retirement funds.
How can you juggle these things and still be able to save enough money for retirement? It’s actually all a matter of personal preference, as well as the different concerns that will affect your financial decision. For instance, here are some of the concerns that will affect your financial decisions when you are in your thirties:
- Your student loans.
Are you still paying off your student loans? If yes, remember that it is best to have it paid off as quickly as possible so that you can free up your funds for more important things and investments.
- Your credit card debts.
When you first got hired for your job, you probably charged your corporate clothes to your credit card. If you have one credit card too many, you might want to consider hacking away at these debts, or at least consolidating them so that you won’t have to pay any more in interest rates than you have to.
- Your personal status.
Are you moving to a better apartment? Are you thinking about buying a new car? Are you thinking about getting engaged? If you’re already married, are you thinking about having kids? Your personal circumstances in your 30s are another factor that will affect the financial decisions that you would soon be making.
- Your position at work.
The third decade of your life is usually when you would need to prove yourself financially. If you’re established at a particular company, are you working on climbing the corporate ladder? Or maybe you would like to transfer to a different company which offers better financial opportunities?
If you’re an entrepreneur, are you thinking about expanding? Depending on what you are currently earning and your short-term career plans, you would be making financial decisions considering this very important factor.
10 Great Investments to Make in Your 30s
The way that you manage your money during your thirties would have a huge impact on how the funds would be rolled over onto your 40s, 50s, and 60s. You don’t want to reach your golden years still paying for that lavish vacation that you took several years ago, so it pays to think twice about making any impulsive financial moves.
It’s also important to start investing early so that you can reap more rewards later on. Take a look at our top ten tips on how you can save money and which investments you should make the minute that you reach the big 3-0:
1. Prioritize three or four of your biggest financial goals.
If your thirties is that decade when one major life development happens after another, how are you supposed to juggle it all? Financial experts advise that you prioritize three or four of your biggest obligations. If you use a fire hose to fill up too many buckets, none of them will get full at all. To make things easier for your budget – and yourself – focus on three to four things.
If you’re paying off student loans, credit card debts, paying for a car, a new home and kicking off your retirement fund – which among these should be your priorities? Go for paying off credit card debts and student loans; establishing an emergency fund; and kick starting your retirement savings. Once you have made pretty solid contributions to these, you can start adding funds to other things like your kids’ college fund or down payment for a new house.
2. Make that investment to pay off your debts.
How many credit cards do you own? If it’s two or more, allot more payment towards the card with the highest interest rate. For the others, you can pay the minimum balance. Your student loans should ideally also be paid during your thirties.
If you can’t pay it all off in one go, at least pay down a significant amount, especially if you are paying a high interest rate. Most student loans have a 4% to 6% interest rate, which can really add up especially if you leave the loan unpaid for several years.
3. Make adjustments to your insurance coverage.
If you’re a thirty-something parent, you should start reassessing your insurance needs. Having dependents would require you to have life insurance. This way, you can give your loved ones that sense of financial security in case something unfortunate happens. Based on the nature of your work, you can also acquire short-term and long-term disability insurance, as well as health insurance for the kids.
Ask your employer about the insurance plans included with your employee benefits package. You can also go with an umbrella insurance plan where you will be paying one discounted price for all your insurance packages through one provider.
4. Continue adding money to your emergency fund.
A good rule of thumb to follow when saving up for an emergency fund is to maintain three to six months’ worth of living expenses in a separate fund. In case of job loss, you would have funds to live on while you are still getting back on your feet financially. Look for a high interest savings account, but since this should be liquid, it is better if it’s in a safe rather than risky financial instrument.
5. Invest at least 15% of your income for retirement.
If you’re employed, the good news is that you only have to match your employer’s 401(k) contribution to save up for retirement. If the company gives you 5%, you can save up the remaining 10% of your income. If you get promoted or if you have other sources of income, bump up your contributions so that you can work on building a bigger nest egg.
6. Make that investment to improve your credit score.
We unfortunately live in a credit-based society. Even if you’re more than willing to live using cash to pay for things for the rest of your life, having a low credit score or no credit history at all might prevent you from making bigger financial moves – like buying a house or a home.
While you are still young and able, continuously monitor your credit score and work on upgrading it if you have a low score. Look for errors once you receive your free credit report and correct them accordingly, so that you can improve your score.
7. Invest in your kids.
If you have yet to add a new member to your family but are planning to, you can already pool together funds for bringing a baby into this world. If you already have kids who are about to go to school, consider investing in their college education. However, your retirement fund is more important so only do this if you already have regular contributions towards your 401(k) fund.
8. Consider investing in the stock market.
If you’re pretty good with the money market, consider investing in stocks. It’s a more aggressive way of growing your money although there are risks involved. You can take your pick from blue chip stocks, income stocks, growth stocks, value stocks or international stocks. Of course, you need to learn about the basics of investing in the stock market if you want to maximize the earning potential of your money.
9. Go for bonds or mutual funds.
If you don’t like the stock market, go for mutual funds or bonds. The different types of bonds include municipal bonds, treasury bonds, or zero coupon bonds. Municipal bonds are tax-free income issued by the state and local governments, making them perfect for investing your tax-deferred amounts in.
10. Also consider investing in real estate or commodities.
Aside from stocks, bonds, and mutual funds, you can also invest in real estate, commodities, private equity, hedge funds, or venture capital. Again, it’s important to learn about the basics first if you wish to dabble in playing with these financial products in the market.
Put your money in as many of these investments as possible and by the time you reach your forties, you would more or less have a solid financial future to look forward to.