Thirty may be the new twenty in terms of having kids, getting married, and owning a home, but hopefully you started saving far before your thirtieth birthday. More people are having kids later, and also saving for retirement later. Ideally, though, people should start saving as early as possible — hopefully in their twenties so that the money has time to grow. If you didn’t start saving in your twenties, you still have time, but an advantage to starting young is that you often have less bills and fewer people depending on you. In addition to saving money, there are many other financial habits that should be established in your thirties in order to have a financially secure future. Here are six financial habits that you should prioritize now in order to get your finances in order and be prepared for the future.
1. Save for retirement
If you haven’t started saving for retirement yet, now is the time. If you have started saving for retirement, save more. If so far you have focused on fairly safe options, like bank CDs, you may need to start considering other options. IRAs and 401(k)s are the ideal way to save for most people. An IRA will give you a break on your taxes. Which plan you choose will probably depend on what your employer offers, and how much extra income you have to save. It’s important to note that there is no exact amount of money that you need to become financially secure; one person may need $2 million saved for retirement, but another person might need twice that. It depends on your spending habits.
2. Spend wisely
Point two is directly tied to point one: you need to save, but you also need to spend wisely if you want to save enough. Spending wisely requires a budget, so if you don’t have one, make one as soon as possible, and then stick to it. Limit your discretionary spending; now is the time to focus on savings, not spending. While it is important to have money in your budget for fun activities, your priority in your thirties should be saving. Try to avoid impulse spending, but also, make sure that you are making wise spending choices on a regular basis. Eat out less frequently, purchase less expensive or used items when possible, and avoid spending money just because your friends are spending money.
3. Become debt-free (and stay that way)
Becoming debt-free is one of the smartest financial decisions you can make, and staying debt-free is the perfect habit to increase your chances of a steady financial future. Hopefully you paid down some of your debt in your twenties, but now is the time to pay it off completely if you can. Once you get rid of your debt, you will be free to save more for your retirement and for other expenses. Being debt-free will also give you more options in other areas of your life like your career. If you are bored at your job, or you want to leave for another reason, debt might be preventing you from doing so. If you become debt-free, you won’t be as dependent on your income. While you shouldn’t take months off from work, being debt-free may allow you to afford a job that you would enjoy even if you take a pay cut.
4. Set financial goals
Your thirties are the perfect time to set financial goals. You can set short-term and long-term goals. If you are hoping to go on a vacation soon, look at your budget and see how much you need to save each month to make your trip happen. If you are saving for a car, figure out how much you can afford to pay as a loan, and how much you need to pay when you purchase the car. Also, make long-term goals a priority as well: build your emergency fund (as quickly as possible, but you can add more over time) and determine how much you want to save for retirement. Order your savings goals so that you can keep in mind which are the most important. Consider creating or using a goals sheet, like this Smart Goals Worksheet.
5. Get your family on board
If you’re married or in a committed relationship, you and your spouse need to be on the same page financially. Participate in money decisions together by coming up with a budget, discussing big purchases, and talking about long-term goals. If you have kids, it’s important to teach them to be financially responsible as well. Depending on their age, you can teach a young child about money just by example, and as children get older, you can discuss credit cards, loans, and other financial matters with them. If you make financial stability a part of your regular family life, you will be helping your family, but also yourself. If you and your partner are on the same page, you will be less likely to get into debt because you will both hopefully stick to those goals. Also, if you teach your kids to be financially stable, you will be less likely to have to bail them out later in life.
6. Be a grownup
If you have depended on your parents too often for money, now is the time to stop. By making financial goals and getting out of debt, hopefully you will be able to become financially independent. Your parents shouldn’t have to pay for things for you anymore, except perhaps in an extreme emergency. Learning to pay for things yourself will help you in the long run, because you may not always have help from your parents (or other people.)
Another important part of acting like a grownup is getting insurance. You need to protect yourself in case something happens, and if you have a family, you should protect them as well. If you don’t have a will, you should create one.
If you are in your thirties, you should definitely prioritize these six financial habits now. The sooner you can learn and adapt to these six habits, the better off you will be.