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8 Crucial Financial Moves To Make In Your 30’s

8 Crucial Financial Moves To Make In Your 30’s

Your 20’s were fun, maybe too fun.  Now that the dust has settled and you’re part of the real world, here are eight crucial financial moves you must make this decade:

1.  Invest in Yourself

This is the time to separate from the pack.  Spend some of that hard earned money wisely to gain the advanced education, industry certification or specialized job skills necessary to make yourself more qualified, more marketable and ultimately indispensible.

Georgetown’s Center on Education and the Workforce 2011 study found workers with Graduate Degrees make as much as $35,000 more in the same field as their counterparts with only Bachelor’s Degrees (http://cew.georgetown.edu/whatsitworth).

Just because that diploma hangs on your office wall doesn’t mean you’re done learning.  Do what your colleagues won’t do and spend the extra money and time to collect more arrows in your quiver.

2.  Establish an Emergency Fund

Human nature seeks immediate gratification.  True financial security and success comes from training yourself to delay that gratification until a future date.  Having an emergency account for those unexpected expenses keeps you from borrowing and gives you invaluable peace of mind.

This can be a daunting task so start your emergency fund with small amounts at a time.  Make your morning coffee at home four days a week and splurge only on Friday.  Nix all those cable channels you never watch.  Skip the lunches out every day and bring food from home.

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Now put these savings into a new account labeled “Emergency Savings.”  You’re less likely to pull funds from this account frivolously when you’re constantly reminded that it’s for emergencies only.

3.  Stick to a Budget

It’s not sexy but a little self-control and discipline will make your 40’s and 50’s much more enjoyable.  Add kids, school costs, summer camps, etc. and the cushy lifestyle of your 20’s will be a distant memory.  Prepare for this in advance by understanding where your money goes and what you can do to keep more of it.

Setting a budget is more an exercise in discipline more so than tracking every single penny.  There are tons of budget software programs and expense tracking sites out there.  My personal favorite is Mint (www.mint.com). An old saying that rings true to this day says “First we make our habits, then our habits make us.”

4.  Maximize Retirement Savings

If your workplace offers a matching 401k or similar program, you’re a fool to give up free money.  Take advantage of this gift.

Once you’ve contributed enough to get the match and you have an Emergency Fund established, you should consider diverting more towards your retirement accounts.  In traditional 401k, IRA and similar retirement accounts, your investments grow tax deferred until you take income during retirement.  Ask your investment professional about where your money is being invested and pay attention to fees.  You don’t need to be an expert but you need to take responsibility and understand what’s going on — this is your retirement after all.

There are hundreds of calculators you can test but suffice it to say that waiting until you’re 40 to start these retirement savings will leave you at a terrible disadvantage.  Albert Einstein was spot on when he pegged Compound Interest as the Eighth Wonder of the World.

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5.  Manage Financial Risks

Forget about that fancy car you’re driving, the purse collection and your “priceless” vinyl collection.  Your single most valuable asset is your future earnings potential – your ability to make money.

You insure that car, those records and you’d have a conniption if something happened to your handbag.  So why not protect yourself in the same way?

Review your disability and life insurance protection for the sake of your current or future family.  Often times the coverage offered through employee benefits may not be sufficient.  Take a few minutes to complete a disability or life insurance needs analysis and see for yourself (http://www.lifehappens.org/insurance-overview/life-insurance/calculate-your-needs/).

6.  Take Control of Your Credit Cards

This one is simple.  Not easy, but simple.

Carrying credit card balances forces you to pay high interest rates, which, in turn, creates even higher credit card balances.  Break this vicious cycle and use credit cards only when absolutely necessary.

Don’t misunderstand me.  Credit cards serve a very useful purpose but they should be treated as a tool, not the tool.  I speak from experience in saying it’s easy to swipe the card and not think about the consequences.  Do that enough in your 30’s and you can kiss retirement goodbye.

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7.  Understand Good Debt and Bad Debt

In your 30’s, assume debt with extreme caution.  If you’re like most of us 30 somethings, you still have some cleanup from your 20’s to address — don’t make the problem any worse.

Taking on Debt for a quality home purchase, higher education or similar future-focused asset may be wise.  Borrowing money at high interest rates for a new car, those designer shades or for your dream vacation almost never makes financial sense.  The real danger is that these short-term decisions are often the more fun and offer instant gratification but leave you reeling afterwards (see #7 above).

General Rule:

Good Debt = used as leverage towards improved value long term

Bad Debt = used in lieu of cash savings you don’t have to buy something you can’t afford whose value will never be greater than at the time of purchase

8.  Give Back

This may seem crazy or even impossible given the constraints of your everyday life.  Trust me when I say you’ll get more in return than you can ever imagine by giving to those in need.

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Make a regular donation to your favorite local charity.  Don’t have one?  Use a resource like Charity Navigator (http://www.charitynavigator.org) to find a cause near and dear.

If money is tight, consider volunteering your time or your expertise to and organization in need.  Public Relations?  Graphic Designer?  Appliance Technician?  All charities, nonprofits and organizations for the greater good need these services just like any other business.

Arthur Ashe famously said “From what we get we can make a living; what we give, however, makes a life.”

 

Everyone lives a different life and should take their own personal circumstances, careers and families into consideration before making any significant financial decisions — in your 30’s or at any other time.  Consider meeting with a financial professional who may be able to help shape good money habits in this crucial decade.

Featured photo credit: Gratisography via gratisography.com

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Published on November 11, 2020

10 Best Ways to Save Money Faster and Smarter

10 Best Ways to Save Money Faster and Smarter

People love to talk about budgeting, reducing spending. and investing. But unfortunately, talk is cheap, and poor money management is expensive. It’s easy to talk about the best way to save money, but putting it into practice is a different thing.

What people need to talk about is the practical and efficient ways you can quickly save money to accomplish your goals. After all, they don’t teach this stuff in school.

Here are the 10 best ways to save money faster and smarter.

1. Cancel All Your Subscriptions

Yes, all of them.

Okay, you can keep your wifi and trash. But other than that, cancel all your monthly subscriptions for one month. You will survive, I promise. Better yet, you will realize you won’t miss all of them.

Now that you have had 30 days to examine what you really missed and what you never thought twice about, you can add some of them back in. The others? you never have to think about them again.

This is something you can and should do with every part of your life. If it’s clutter, cancel it. Being able to step back and see what is cluttering your life and what is excelling your forward helps improve your quality of life and financial standing.

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2. Automate Savings From Your Paycheck

Many of us are so excited about getting a new job that we rush through the paperwork during the hiring process. Good news for you, I have had lots of jobs so I have seen it a million times.

There is an option for a portion of your paycheck to go directly into a secondary savings account. This is by far the most effective way to save money every month. We tend to spend most of what we have. So, if we take it off the top first, then it’s less likely to be spent. Just head over to HR and ask. It will only take two minutes.

3. Cancel the Happy Hours for the Rest of the Pandemic

We are in the middle of a global pandemic, which means that there is no better time to buy some drinks from the local store and stop shelling out $5 a drink at the local cocktail bar. When we look back at our bank statements, we are always shocked that fast food and alcohol can add up so quickly. You can easily save a couple of hundred dollars just by taking this step.

A great exercise is to print out your last bank statement and highlight all the areas of alcohol and fast food. The amount may surprise you and make you think twice about that old fashion.

4. Online Grocery Shopping

Some people think online shopping increases the amount they spend. For the most part, I would agree—except for this category.

Online grocery shopping is now a no-brainer, though. Whenever you walk through a grocery store, two things always happen: you always grab impulse items, and you never know the total of your cart until you checkout. This means that we always spend more than we originally planned.

With online shopping, you can see your total as you add items to your cart. You are way less inclined to make those impulse purchases and because of that, I would venture to say that you could even pay to have them delivered to your door and still save money each month by choosing online grocery shopping.

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5. Get a Famzoo Debit Card

This is something my wife and I swear by, and it’s great for the entire family! Famzoo strictly exists to help families and kids budget their money better. Each month, my wife and I have an allotted amount loaded onto our pre-paid Famzoo debit card. This amount has changed every year depending on promotions, kids, stage of life, etc.

The important part is that when you give yourself the freedom to spend a certain amount, you are more likely to only spend the allotted amount. Think of it as a diet. If you are counting calories, you are more likely to stick close to the amount you set. You can also look for some tips online to better stick to your family budget.

6. Purge

This is actually my favorite to do, and it is actually one of the best ways to save money. Raise your hand if you have ever moved. Okay, so everyone.

When we move, we are always amazed at how much junk we have acquired. I have found that about every 6 months, I can find a couple of boxes to sell online of things that we never use. This not only gives you so extra quick cash, but it also keeps your house more tidy and organized.

Now, go clean out that garage!

7. Amazon Subscribe and Save

32! That is how many items I have setup on amazon subscribe and save. Let me explain.

This sounds expensive, I know. But it actually saves us hundreds of dollars per year! We all need toothpaste, shampoo, razors, laundry detergent, toilet paper right? This feature is truly a triple threat. When you have more than 5 items on subscribe and save, you automatically unlock the max savings for every product on your list. This can be up to 20% per item!

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Now, even better is that it ships straight to your door on the exact day you want the item, maybe monthly or maybe you only need it every 4 months. This way, you never have too much or never run out. Either way, it’s totally customizable.

Lastly, there is no contract for any items, which means you can switch brands or items at any given time at no cost. My advice: every single staple item should be on your subscribe and save.

8. Rewards

This may ruffle some feathers, but if you are using your debit card for purchases, you are missing out on free money! We have this notion that credit cards are evil but in reality, they are the same piece of plastic as your debit card.

How you use it can be bad, don’t get me wrong. But if you want my opinion though, ditch the debit card and get a rewards credit card. Use it just like you would your debit card and make sure to pay it off as soon as the statement comes in!

Just to give you an idea of how powerful this can be in terms of money, here are some things that our miles have paid for:

  • 4 nights in Vail with Flight
  • Rental car in Vail (convertible might I add)
  • Flight to Ireland
  • Flight to Hawaii
  • Multiple staycations at very nice Hotels

That’s roughly about 7 thousand dollars in travel expenses so far! Remember that the credit card is just a tool and can be one that benefits you if you use it wisely. Ironically, this can be an effective way to save money.

Pro tip: If you don’t trust yourself carrying around a credit card, then set up all your monthly bills with your credit and leave it in a drawer at home. This way, you rack up miles but don’t get tempted to overspend.

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9. Vacation With Friends

Now, I know travel is hard right now but what a perfect time to go grab an Airbnb in the woods with a couple of friends and detox from the world right now!

Vacationing alone can be pricey and get rather boring quickly, but if you split lodging and set out for a road trip, it can become affordable quickly! For a couple of hundred bucks apiece, you can have one of the most relaxing vacations ever. Don’t forget to pick up your food at the local grocery store to avoid eating out every meal!

10. Make a Budget

When is the last time you updated your budget or made one for that matter? Making a budget is like writing down your goals. If you don’t make a budget, then you will struggle to save.

How can you know if you are spending wisely if you are not tracking everything?

Our advice would be to get a finance app like Mint, Every dollar, or personal capital. All these apps are free and do a tremendous job of tracking spending and budgeting. I still am old-school and have an excel spreadsheet which I do highly recommend.

Work Smarter, Not Harder

The entire goal is to boost your bank account while reducing the effort required. Efficiency is the name of the game, and automation is the key player. Luckily, we live in a world that has more perks than we can ever take advantage of. But if I were to choose a few, it would be the ones above.

Taking on all 10 of these steps may seem a little daunting. You can first try to pick three of your favorite and start there. Saving money doesn’t have to be a chore as long. As we use the tools correctly, it can be quite effortless. And now, you have a great blueprint to get started!

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Featured photo credit: Sharon McCutcheon via unsplash.com

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