- It’s never too early to start improving your personal finances.
- There are some financial lessons you should definitely learn in your 30s.
- Budgeting, setting realistic goals, and tracking debt are essential to securing your finances.
It takes a lot of time and discipline to figure out how to manage money wisely. It’s not something that happens overnight – some go their entire lives without learning how to manage their money.
While you may still feel young and invincible when you turn 30, the truth is, you’re pretty much halfway through retirement. The sooner you learn to budget, the better your finances will be in the long run.
Below are the most important financial lessons you’ll need in your 30s.
1. Stick to a budget
Most 20-year-olds play with the idea of budgeting or have used an app to track their finances.
However, very few are able to stick to a budget. Once you’re 30, it’s time to start distributing every dollar you earn.
The overall goal of budgeting is knowing where your money is going so that you can make the right decisions.
Keep in mind that the dollars spent add up over time. You can spend money on fun shopping or trips, as long as it fits your budget and savings goals.
2. Leave 10-20% of what you earn for free to save.
This is another tip you should keep in mind when you are in your 30s, and it is recommended by the vast majority of financial planners.
When your payroll arrives each month, you need to know what needs to be spent for fixed expenses, variable expenses and, lastly, savings.
It is always advisable to set aside 20% of the money that comes into your checking account each month. If your income is low, set aside 10% instead.
3. Be realistic about your financial goals
Sit down and really think about your financial goals. Visualize the age at which you would like to reach them. Write them down and find out how to make them come true.
You are more likely to achieve your goals if you write them down and create a plan.
For example, if you want to go on vacation to Italy, stop dreaming and come up with a game plan. Do some research to find out how much the vacation will cost you, then figure out how much money you’ll need to save each month.
Your dream vacation can become a reality in a year or two if you take the right steps in planning and saving.
4. Calculate your debt situation
Many people become complacent about their debt once they reach their 30s. For those with personal loans, mortgages, or credit card debt, paying them off just becomes another way of life. You may even consider the debt to be normal.
The truth is, you don’t have to live your entire life to pay off your debt. Evaluate the leverage you have beyond your mortgage and budget to help you avoid taking on more debt.
There are many methods of eliminating debt, but the snowball effect is popular for keeping people motivated. List all your debts, from smallest to largest, regardless of the interest rate. Pay the minimum payment on all of your debts except the smallest.
Paying off your debts will have a big impact on your personal finances. This will allow your budget to stretch further and allow you to increase your savings.
5. Create an emergency fund
If you don’t have emergency funds, you’re more likely to use your savings or rely on credit cards to pay for unforeseen expenses.
Make a plan to have enough capital to deal with any eventuality.