Financial Facts for Your 30s

By Dawn Kellogg

It takes time and discipline to become financially savvy. Some people go through life living paycheck to paycheck and never saving, and some have learned from a young age how important it is to be fiscally responsible. Learning how to handle money early on can certainly put you on the right path.

Hopefully, you’ve spent your 20s building a good solid financial foundation. Now that you’ve reached your 30s, here’s your chance to use this time to build and protect your wealth.

Rethink your budget.

You spent your 20s establishing your budget and maybe even have built up some savings.  Now that you have reached your 30s, maybe your needs and wants, as well as your income and expenses, have changed. Your budget will need a certain amount of flexibility as you adjust to life changes like getting married, having kids, or starting your own business. You may need to adjust spending in some areas to reallocate to other areas. For example, the budget line that was allocated for going out with friends might be altered to fund things for a wedding or a new home.  You might even consider increasing the amount you have set aside for emergencies or retirement.  For stability and flexibility, remember to stick to the budget that you’ve created.

Document your financial goals.

What are your financial goals? Write them out and figure out how to make your dreams a reality. You are more likely to achieve those goals if you create a plan and write it down. Do you want to buy a house? Take a dream vacation? Pay off all debt? All these are achievable if you make a plan and take steps toward those goals.

Adjust your insurance coverage.

As your assets grow, so should the insurance that you need to cover them. If you have a bigger apartment, you may need to increase your renters insurance, or if you’re purchasing a house or car, you will need insurance to cover them. Maybe you now have dependents and you need to adjust your health insurance or take out a life insurance policy to make sure that they are taken care of should anything happen to you.  Even if your situation hasn’t really changed, you should periodically re-shop your insurance to make sure you’re getting the best deal.

Pay off non-mortgage debt.

This seems to be a pervading topic for all age groups as we acquire debt in different ways as we age.  Hopefully in your 20s you created a plan to pay off your debts. Stick with it throughout your 30s so that you can spend your 40s building your savings for the future, not paying off past debts.

Educate yourself about your student loans.

Like millions of others, you may still have student loans. A 2016 study conducted by Citizens Bank found that more than half of borrowers don’t fully understand how student loans work, making the dream of being debt-free seem far-fetched. Six out of ten millennials reported underestimating monthly payments, while 44% of all borrowers did not make any payments from March 2020 to September 2023 when student loan payments were put on hold. Keep an eye on these debts and be aware of how much interest will compound on these loans. Consider refinancing if you are not eligible for loan forgiveness, or if your loan is with a private lender and you want to lower your interest rate. The Summit offers Student Loan refinancing at competitive rates. Click here for more info.

Increase your emergency fund.

Your goal should be to have six months’ worth of living expenses in your emergency fund. As your income and expenses rise, so should the amount in your emergency fund. An emergency fund should not live in your mattress. There are ways to earn interest on your savings through money market accounts and higher yield savings accounts. The Summit’s money market account can make your money work for you. Click here to find out more.

Save at least 15% of your income for retirement.

Don’t forget future you! Hopefully you started saving for retirement when you started your first job, but you may have only been able to contribute enough of your paycheck to qualify for your employer’s 401(k) match. The hard truth is that you are now halfway to retirement. Experts recommend saving 15% or more of your gross income for retirement. Your employers match or contribution counts, so if you get 4% from your employer, you just need to save 11% on your own. Each time you get a raise, bump up your contribution. If you get a bonus or extra cash as a gift, save it for future you.

Monitor and improve your credit.

You should check your credit report every year.  You can do this for free by visiting Annual Credit Report.com – Home Page and viewing a free report form each of the three credit bureaus every year. By doing this, you can fix any errors early on, catch any attempts for identity theft, or get on top of a potentially delinquent account.  Note: this free credit report does not give you your actual credit score. For your credit score, you can visit Experian.com or any of the free online resources. If you have a credit card, many credit card websites will also give you your FICO score for free.

Diversify and rebalance your investments.

Now that you have the basics settled, now is the time to take on more financial risk overall with mutual funds and exchange-traded funds. Reach out to a financial services advisor who can help you through the process.

Write a will and designate power of attorney.

It sounds rather gloomy, but we are mortal after all. Documents such as a will, a living will, and power of attorney are not just for your parents or grandparents. You have acquired some assets, and it’s important to write a will and designate a power of attorney. If you don’t, complete strangers will decide how your estate is divided and who will raise your children should something happen to you. You can make out a will on your own. There are several online resources that help you through the process. If your circumstances are complex, you’ll need a lawyer who will charge you to draw up a will or an estate plan involving a will and a trust.  Be sure to update these documents periodically to account for major events such as marriage or the birth of a child.  Designating a power of attorney, and a living will, will help loved ones manage your care and finances if you become incapacitated.

Don’t try to keep up with Joneses.

You may find that you are envying your brother’s big house and new Mercedes, but you should not try to compete by stretching your budget and taking on lots of debt. Don’t compare yourself and your stuff with others. Focus on your financial goals, live within your means and be happy with your own life.