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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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Last Updated on June 26, 2020

25 Easy Tips on How to Save Money Fast

25 Easy Tips on How to Save Money Fast

“How to save money fast?” This is the question asked by all of us not in the top 1% of rich people.

If you are looking for ways to drastically reduce your expenses immediately, first look at what you need to spend money on every week. And I mean really need.

You don’t really need to order in food. You don’t really need to buy expensive perfume.

Building from that, you can work out how your regular expenses can be reduced.

As for irregular expenses, they can also be deceptively costly in the long run. Once-off buys can also be tackled with some prudent planning and a little extra research.

And remember: a budgeted lifestyle does not mean a bad or boring one!

But first, understand what budget you can cut down on daily:

  • Regular expenses for the average adult (can be trimmed but not eliminated):
    • food
    • rent/mortgage
    • cell phone
    • insurance
    • socializing/entertainment
    • transportation
    • hygiene products
    • household bills
  • Irregular expenses for the average adult (can be eliminated or cut down a lot):
    • travel
    • clothing
    • medication (*depends)
    • grooming (hair, nails etc.)
    • gifts

Now, let’s dive right into the 25 ways to save money fast:

Save Money on Food

1. Bring a stock of food to the office/work

Instead of popping out for an overpriced salad and a smoothie, leave a set of basic utensils at the office as well as a stock of non-perishable goods such as tinned fruit, tuna, rice crackers and so on (try to avoid the junk food and this can turn into a pretty great diet!).

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Stocking up means you won’t forget or say “I didn’t have the time” when you rushed out to work in the morning.

2. Buy the store-brand version

Many basic foods, such as bread and milk, will taste exactly the same as their branded alternatives. Go for stuff with minimal additives and preservatives. Meat in a tube is probably insanely unhealthy!

3. Eat cheaper cuts of meat

Learn how to tenderize and flavour cheaper meat and fish, and save on the (typically) most expensive item on your grocery bill.

4. Have group dinners

If 10 friends put $5 each in the kitty, it’s pretty easy to make a giant lasagne and get refreshments, as well as hang out with your favourite people.

Save Money in Transport

5. Get a bicycle

Save on gas money and bus/metro fares with this underrated mode of transport.

6. Use public transport and/or don’t get taxis

Some places can only be reached by car. But as a good practise, check your public transport website and see if any routes pass nearby where you need to get to. Walk as much as you can.

7. Find the cheapest gas

Regularly check out where the cheapest gas can be bought.

Save Money in General Shopping

8. Shop online

Not only will you save on the gas or transport fares from going to the shopping mall but you will also find better deals

9. Sell your old stuff

Get your unwanted belongings up on eBay ASAP and earn a few dollars.

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Here’re more ideas for you: 25 Things to Sell to Make a Lot of Money

10. Bulk buying stores

For regular non-perishable/slow perishable purchases such as toilet paper, cat food, pasta, washing powder and so on, do an epic stocking-up trip to a co-op or equivalent (my mum used to go to a place that restaurants buy from).

Be wary of supermarket “deals”, as some have been found to be fraudulent after working out a simple calculation.

11. Become a flea market/car boot sale/street market guru

You can find original gifts and develop good negotiation skills at these places.

12. Generic brand medication

More often than not, the generic version of paracetamol and other basics work the same as the branded version.

13. Choose deodorant, not perfume

It blows my mind when someone drops $70 on a bottle of spray. Stick with a nice deodorant, and not only will you smell just fine but you’ll be sweat-free as well!

Cut Down on Household Expenses

14. Printing

Ink is one of the most expensive substances in the office and coloured ink is doubly so. B

e more efficient and choose black and white, and if your printer doesn’t have a print-both-sides options, just print odd pages first, re-insert the paper and print even pages.

Expand the margins of what you are printing as often as you can to save on paper.

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15. Minimize SMS and phone calls

A combination of a free chat service such as WhatsApp and a free call service such as Skype can reduce your bill to nothing (so long as you have a decent Wifi connection).

16. Shop around for insurance

Most people don’t spend enough time searching for the best insurance deal.

Keep a watchful eye out for deals and new competitors in the market.

17. Try re-negotiating your rent/mortgage

If you have built up a good credit history or a good rapport with your landlord, then chances are a frank chat about needing to tighten your spending could result in lowering your payments. You’ve nothing to lose from trying.

18. Don’t get a TV

Invest in a computer/laptop and an internet-only package. You can watch more (and often better) entertainment on the web, and skip the advertisements as well.

19. Pool your internet bill with a neighbour

My apartment building is basically a big old house split into three apartments. There are five of us in total. We pool the internet bill, making it crazy cheap.

Save Money in Socializing, Entertainment And Travel

20. Have house parties

Instead of paying for overpriced drinks, set up a series of in-house get-togethers with your friends. Everyone takes a turn, so it’s not always your house that needs cleaning.

For sound insulation, hang heavy drapes on the walls and windows. For music, invest in a good second-hand set of speakers which you can connect to your computer. Let Spotify or Grooveshark playlists do the rest.

21. Open festivals, meetups and events

It never fails to surprise me how much underground stuff goes on around me for free or for very cheap. Find out who runs the blogs and websites that list all the less well-known cultural activities.

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22. Volunteer

If you can’t pay for a ticket, volunteer and get to be there anyway.

23. Housesit

There are multiple housesitting websites offering you the possibility to avoid paying hotels and skip the discomfort of crummy hostels.

Save Money on Hygiene and Beauty

24. DIY beauty

French manicures, pedicures, waxing, eyebrows… pretty much all of these can be achieved at home (and done well) with some practise. There are plenty excellent blogs and YouTube tutorials to help.

25. Fewer haircuts/volunteer at a trainee hairdresser

If you can’t bear the risk of a trainee touching your locks, learn more ways to manipulate your hair as it grows and get haircuts sparingly. Women’s haircuts are outrageously priced in many cities.

Bonus: Effective Money-Saving Tips for Everything

Here’s a summary of what you can generally do to save more money:

  • Share/pool resources. Organize a neighbourhood sharing scheme, common resources for your apartment block or with your friends. Not everybody needs an individual lawnmower.
  • Buy energy-saving everything. The easiest way to lower your bills – replace those lightbulbs!
  • Buy in bulk. Be sensible about it (i.e. make sure you have space!), and drastically reduce weekly expenditure.
  • DIY. Skill up using YouTube tutorials on plumbing and many other essential services so you never have to pay for simple problems again.
  • Research a lot before making a decision. Most money-wasting is the result of poor preparation and planning. Don’t shirk this part just because you don’t like it!
  • Use your network. Your network is full of resources that can ease the pain of budgeting. Ask for help.
  • Stop and think. Do I really need it?

Unfortunately, there are some things that require plain ol’ giving up for the time being. This can include high-cost sports such as skiing, the latest versions of some technologies, the finest brands of food/drinks, premier seats at the opera and most other indulgences.

What is important to remember during lean times is that when you look back on your life, it will be the experiences that stand out, not the extra comforts.

Living on a budget can teach you a lot about how much you can really get out of your paycheck. We only live one life, so make the most of every penny you earn!

More Tips for Personal Finance Management

Featured photo credit: Unsplash via unsplash.com

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