Published April 02, 2012
Ask anyone in their 30s and they will tell you that this decade in life can sneak up on you quickly. More experience on the job market hopefully translates to more money and smart investment strategies.
Differences from investing in 20s
When you are in your 20s, some of the best financial advice you can get is to start saving, build an emergency fund and start a 401K. If you didn't accomplish these tasks in your 20s, don't worry you're not alone, but now is a good time to start.
If, by your 30s, you have purchased your first house and progressed financially at work (with raises, promotions or bonuses), you will need to adopt more sophisticated approaches to saving.
Chris Westerman, director of financial planning at Campbell Wealth Management, recommended looking into more advanced planning vehicles, such as life insurance, funding a non-qualified account, maxing out one's 401K and funding a Roth IRA. Westerman added, "One example of a more advanced planning vehicle is the 529 Plan which can result in a tax deduction on tax returns in some states."
More responsibility in your 30s could include children. If it does, you should determine replacement guardians for your kids and update your will.
There is a difference between good and bad debt. When you make payments on your mortgage or car, you improve your credit score. This will reduce the costs of future purchases. On the other hand, massive credit card debt and mortgage payments that exceed 36 percent of your monthly income harm your credit score.
To help deal with debt you might want to contact a consolidation service, such as a bank or credit card company that can reduce the total interest on debt. Westerman said that depending on the amount of debt, the interest can be reduced to zero for a short time.
Westerman suggested that the most rewarding way to become debt-free is to attack the smallest line of debt, and pay the minimum on the rest.
Determine your priorities
During these years, you will have plenty of responsibilities tugging at your bank account. You won't be able to invest your money into every project that strikes your fancy. Otherwise, you will never get out of debt. Some things are far more important to you. So make a list of the goals you have in life, and then take steps toward bringing these wishes to fulfillment.
Start saving in earnest
Although hopefully you have been saving before, now is the time to take this more seriously. Although getting a full match from your company's 401K is a great start, you might want to start planning for retirement early. If you plan to retire far in the future, you won't need to save as much. If you want to retire earlier, you will need to save more, for longer.