Reaching age 30 is a big milestone. You’re likely established in your career, you’ve reached your educational goals, and you’re (hopefully) pretty stable. One area that should also be relatively stable by this time is your personal finances. Here are some areas of your financial life that should be in order by the time you reach your 30s.
1. Invest for retirement
One important financial goal you should focus on as early as possible is setting aside money for your retirement nest egg. Although it’s best to start saving as soon as you’re able (preferably in your 20s when you start your first job with benefits), if you reach this goal by 30 you’ll still have enough time to accumulate a decent nest egg.
You’ll have to save more than if you began 10 years earlier, but all is not lost. Don’t wait until your 40s to set up a retirement account, reasoning that you can’t afford to save. You can’t afford not to save for your golden years. And if your employer offers a retirement match, take advantage of it.
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2. Get proper insurance
By the time you reach your 30s make sure you are properly insured. This includes life, health, and disability insurance. Even if you’ve been relatively healthy for many years, it would be in your best interest to prepare ahead of time just in case you experience a setback.
Life insurance is especially important if others would be affected financially by your passing. “If someone will suffer financially when you die, chances are you need life insurance because it provides cash to your family after your death,” said the experts at Life Happens, a life insurance education website.
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3. Attain financial literacy
You should be at a point where you have a good grasp of basic personal finance. You should know what a stock is, the basics of banking, and how to establish and stick to a budget. If you don’t know these things by now, there are plenty of personal finance books and financial workshops you can take advantage of.
“Research has shown that people who are financially literate end up with more wealth than those who are not,” said Ken Hawkins, founder of Ohow Investor Consultants. “There is a strong monetary incentive for becoming financially sophisticated. Taking the time and effort to become knowledgeable in the areas of personal finance and investing will pay off throughout your life.”
4. Have at least 6 months of emergency savings
Life happens when we least expect it. Be prepared for emergencies by having enough cash. This will reduce the chance that you’ll need to rely on credit cards to get you through a rough patch. Depending heavily on credit cards will just dig you into a deeper debt hole.
Trent Hamm, founder of financial website The Simple Dollar, said saving for a rainy day isn’t meant to be torture. “Quite often, people who don’t have an emergency fund see the idea of having to save up money as some form of punishment — after all, money put in a savings account and locked away is money that can’t be used to live, right?” Hamm wrote. “Actually, it’s quite the opposite – having an emergency fund means that you do have room to breathe.”
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5. Pay off student debt
Student loans are a huge burden. Americans owe more than $1.4 trillion, with the average class of 2016 grad holding $37,172 in student loan debt, according to Student Loan Hero.
By the time you reach your 30s, you should get serious about erasing that debt. Take another look at your budget to determine whether you can pay more on a monthly basis. After all, your finances probably look a little different than they did your 20s. And learn about all the student loan forgiveness options that might be available to you.
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6. Achieve a good credit score
The average American credit score hit a record high in early 2017, meaning many consumers are becoming better spenders. But regardless of what the economy is doing, by the time you hit your 30s you should see some improvement in your credit score.
First, you might actually have to check what your score is, something you probably didn’t do often in your 20s. And know all the ways you might be lowering your score. Check your credit report for errors, and carefully monitor your credit payment history.
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7. Take advantage of rewards programs
You might not have had a lot of good options open to you in terms of banking and credit cards in your 20s. But with a little more stability behind your finances in your 30s you should be able to find programs that cater to you.
Make sure your bank isn’t ripping you off and you’re not being subject to any unnecessary fees now that your balances are hopefully higher. Also, put credit card perks to work for you. Learn what your card offers, and consider opening a new card if the rewards are right.
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8. Build wealth
It’s going to be a while before you can touch that 401(k) or see returns on your investments. So while you’re still young and ambitious, you should try building wealth in less conventional ways.
Take stock of items you don’t use anymore — furniture, clothes, etc. — and try to get money for them. You’re at the age where you’ve probably upgraded or would like to upgrade your possessions anyway. Also, focus on your health and fitness. Preventing pricey diseases later in life starts while you’re still young. And consider asking for a raise at work or applying to a better job. You’re nearing your prime money-making years, so it’s time to set yourself up for success.
Additional reporting by Mary Daly.