Your 30s can be an exciting time with its own set of new challenges. You may be advancing in your career and earning more money. You may be married with an eye on buying a home or having children. The financial decisions you face in your 30s can be remarkably different from the decisions you faced in your 20s. So, let’s check back in with the Des Moines Financial Advisors here at Compass Financial to learn their recommended money managing practices for people in their 30s.
How does money management & investing shift for someone in their 30s, as compared to their 20s?
Guy Leman: “I’ve seen it time and time again that the money starts to arrive in the mid-to-late 30s. People solidify their careers and start to attain the levels of income that make the day-to-day living easier to manage. With some of those basic concerns taken care of, they can start to expand their wealth-building habits. The lifestyle-type decisions you make in your 30s will impact your finances for decades to come, so be wise with the long-term in mind.”
Caleb Pearson: “As young professionals transition from their 20s to their 30s, income levels do begin to get to a place where there is usually a surplus that needs to be either spent, saved or donated. We typically see more money going into retirement savings at this point, boosting emergency savings, and saving for children’s education. Also, people in their 30s typically have a better handle on their debt by either paying it all off or having a solid game plan to get it taken care of.”
Justin Van Houten: “We do see that financial foundation beginning to take shape in the 30s. People are progressing in their careers and income is increasing. During this time, money management and investing shift to more long-term goals like planning for retirement and college.”
What are three important things someone in their 30s can do with their money?
Caleb: “Save, save, and save! It is very tempting to view the surplus income as an excuse to spend more, but we encourage 30-somethings to stick to their budget and factor savings in. You have heard it a million times, but the earlier you start saving for long-term goals (like retirement), the better off you will be in the long run.”
Michele Bjorkgren: “That’s Kurt Pearson’s famous quote: ‘Spend less than you earn and do it for a long time!’ Still a good piece of advice! I would also add in, create an emergency fund of 3-4 months of your income and pay off your credit card(s) every month.”
Guy: “I would say definitely make sure you spend less than you earn, and put the difference to productive use. Second, know where your money goes. This habit alone will lead you to amazing places. And third, be planning for the future. It comes quicker than you think it will.”
Justin: “My three are a little different. One, pay off any remaining non-mortgage debt. Two, pay yourself first by investing. Set up auto contributions to retirement and investment accounts and maximize those contributions when possible. And three, hope for the best, prepare for the worst. Have an adequate amount of life insurance and disability insurance so your loved ones are taken care of if something unexpected happens to you.”
What are some of the biggest money mistakes people in their 30s typically make?
Michele: “I hate seeing young professionals turn away free money from an employer-sponsored retirement plan, i.e., 401K, if the company offers a match.”
Guy: “Some 30-year-olds think, ‘Oh, I can wait until things calm down in my life to either get started building wealth, or beef up my wealth-building habits.’ The habits built early are the best ones to practice and improve upon.”
Caleb: “I do see some who live outside their means and compare themselves to their friends financially. If their friends are building a new house or getting a shiny new boat, it’s tempting to do that as well! But, a lot of times these things can create stress on your budget and therefore your life.”
Justin: “Trying to keep up with their friends or neighbors can also extend the debt cycle. Buying unnecessary items may not align with your long-term financial goals.”
Caleb: “Of course, you may be in a place financially to do those things and make those purchases, and still save for other goals. If so, great!
What is the number one piece of advice you would give to a new client in their 30s?
Michele: “Kurt’s famous quote above still holds! ‘Spend less than you earn and do it for a long time!’”
Caleb: “I’d say track your spending and define your goals. If you don’t do this, you might find yourself in a paycheck-to-paycheck situation well into your 30s. The earlier you start these disciplines; the better off you will be later on!”
Guy: “Now is the time to get serious about your financial future. Start getting organized and make a plan to succeed. Educate yourself on what your options are and which path you’d like to go down. As always, start with the end in mind.”
Justin: “In your 30s, your financial responsibilities are growing and your overall financial picture is becoming more complex. It’s important you find a financial professional you trust and start having conversations around your financial priorities and long-term goals.”
Financial decisions that you make in your 30s can have a tremendous impact on the rest of your life. It’s never too early to start implementing strategies to set you up for a successful retirement. Getting assistance from a financial professional or Certified Financial Planner™ is a great place to start. Choosing a financial advisor that offers comprehensive financial planning can help you get your entire financial picture in order, helps to alleviate the stress that can come from managing your money, and, perhaps most importantly, allows you to spend your time doing things you love.
Compass Financial Services’ team of Certified Financial Planners™ and Financial Advisors are here listen and work with you to make a plan for your unique situation. What are your dreams and goals? What do you want your money to do for you, your family, and your future? Give us a call at (515)327-1020 or Contact Us for a free, no-strings-attached financial planning consultation with our Des Moines Financial Advisors.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.