10 Financial Pointers for Your 30s

Stacy Rapacon, Kiplinger

October 17, 2014

After establishing a solid financial foundation in your twenties, use the next decade of your life to keep building and protecting your wealth.

Your finances might have felt like a plague in your twenties, but thou shalt thrive throughout your thirties and beyond.

This list of goals will help you continue to build your wealth and blaze a path to financial security.

1. Advance your career

In your twenties, you developed a marketable skill. Now it's time to apply that skill to increase your earnings.

Research potential career paths for workers with your skill. Identify the types of jobs and companies where you might fit. Consider whether you should go back to school for an advanced degree. You might even consider moving to a city where you can find more opportunities in your field.

Sharp career turns can be worthwhile but also risky. You'll need a financial plan to keep your budget steady while you're changing course.

2. Rethink your budget

You established a budget in your twenties and perhaps accumulated some savings. But your income and expenses, as well as your needs, wants and dreams, will likely change from year to year. Your budget will need to adjust to life changes such as getting married, having kids or starting your own business. "It's a balancing act," says John Deyeso, a financial planner in New York City, who works with many young adults (and is himself 37 years old). "Once you get into your thirties, you have more money and more goals, so how do you spread that around?"

You may need to cut spending in some areas to reallocate elsewhere. If you've recently gotten a raise you might consider ramping up your saving for emergencies and retirement.

3. Adjust your insurance coverage

As your assets grow, you may need more insurance to cover them. Maybe you rent a bigger or more private space now or maybe you're buying a house (and need home insurance) or car (and need auto insurance). Maybe you have some loved ones who depend on you financially (and you need life insurance to make sure they're taken care of if anything happens to you). All of these situations call for additional protection.

Even if your situation hasn't changed, you should periodically reshop your insurance policies to make sure you're still getting the best deal. To compare auto insurance rates, try InsWeb and Insurance.com. For life insurance, you can check rates at Accuquote and LifeQuotes.com. If you're changing jobs, be sure you understand your new benefits and how your health insurance premiums will differ from those at your old job.

4. Pay off nonmortgage debt

In your twenties, you came up with a debt-repayment plan. Stick with it throughout your thirties, so you'll enter your forties focused on building your nest egg for the future—not paying off bills from your past.

5. Increase your emergency fund balance

Your goal is to maintain three to six months' worth of living expenses in your emergency fund. As your income and expenses go up, so should the amount in your emergency fund. Worried that all that liquid cash isn't compounding as it might if invested in the stock market? Consider these ways to earn more interest on your savings.

6. Save at least 15% of your income for retirement

When you started saving for retirement, you may only have been able to contribute enough of your paycheck to earn your employer's 401(k) match. Or maybe you've allowed your 401(k)'s auto-enrollment policy to dictate the percentage that you save—typically three percent.

But experts recommend saving 15 percent or more of your gross income for retirement. The good news: Your employer's 401(k) match or contribution counts. So if your boss gives you four percent, you just need to save 11 percent on your own. Every time you get a raise, bump up your nest-egg contributions. If you get a bonus or extra cash as a gift, consider saving it for the future.

Also start thinking about tax diversification, Deyeso suggests. Generally, if you benefit  from a tax deduction now for contributing to a traditional IRA or 401(k), every dollar you withdraw in retirement will be taxed at your ordinary income-tax rate—currently as high as 39.6 percent. By contributing or converting funds to a Roth IRA or Roth 401(k), you'll enjoy some tax-free income in retirement.

7. Diversify and rebalance your investments

Now is the perfect time to diversify. "Once you get into your thirties and you have the basics [such as an emergency fund and other necessities] settled, you can take on more risk overall," says Erin Baehr, a financial planner in Stroudsburg, Pa., and author of Growing Up and Saving Up. At this age, you should invest mostly, if not entirely, in stocks because of their greater potential for long-term gains. Among those stocks, you should diversify between large, midsize and small company stocks, as well as domestic and international picks. We recommend putting up to 70 percent of your portfolio in U.S. stocks, up to 25 percent in stocks of developed foreign nations and five to 10 percent in emerging-markets stocks. Also, you should periodically rebalance your portfolio to make sure you maintain your chosen allocations. Doing so will force you to buy low and sell high.

8. Monitor and improve your credit

You should check your credit report every year. You can do this for free by visiting AnnualCreditReport.com and viewing a free report from each of the three credit bureaus every year. Regular reviews of your report could help you fix errors quickly, catch an identity thief at work or get on top of a potentially delinquent account. To dispute an error in your report, contact the credit bureau directly. If you notice a problem in one report, check reports from the other two bureaus as well. 

9. Write your will

Not convinced of your mortality yet? Well, in your thirties it's time to write a will. Without one, complete strangers will decide how to split up your estate and raise your children.
Be sure to update these documents periodically to account for major events, such as the birth of a child.

Several other documents—a durable power of attorney, a release-of-information form and a living will—will help loved ones manage your care and your finances if you become incapacitated. Gloomy as it might be to consider, it's better that you clarify all these things ahead of time rather than leaving it to your mourners to figure out.

10. Thou shalt not covet thy neighbor's stuff

By your thirties, it may be quite clear that your choice to major in English and become a writer has awarded you an income and lifestyle that pales in comparison with that of, say, your sister…the doctor. You may find yourself envying her big house and new BMW. But you certainly shouldn’t try to keep up by stretching your budget and taking on mountains of debt. Doing so will ruin your finances. So don't compare yourself or your stuff with others. Just focus on your financial goals, live within your means and be happy with your own life. And try to be happy for your sister, too.


The views of the authors of these articles do not necessarily represent the views of First Republic Bank.