What should your finances look like in your thirties?

how to budget for retirement in your thirties

So much life is lived during your thirties. Many people think that their twenties is a time of transition, but I have clients in their thirties getting married, having babies, buying homes, or embarking on new career ventures. Personally, we went through fertility treatments, bought and sold a home, went through a career change for my husband, and I embarked on the early years of my business in the first half of our thirties.

When you’re in your thirties, you’re also working hard to get ahead financially, and it can be challenging to set priorities when there are so many outstanding “to do’s” on your checklist. Instead of looking at a laundry list of action items ahead of you, I’ve found it can be helpful to break your financial to do’s into three priority levels: what you need to focus on now, what you’ll need to focus on soon, and what’s coming a bit farther down the road. This allows you to tackle the most pressing items first and to kick the can down the road a little bit on the things that you may have been over-prioritizing right now. Here’s where to start.

What to focus on right now

Your thirties may be the first time in your life where you’re actively getting your finances in order. It’s time to start laying the groundwork for a successful financial future. The actions you take now will have a major impact on the lifestyle you’re able to maintain down the road.

Emergency fund

Your first priority in your thirties should be building an emergency fund. Most financial professionals will recommend that you have anywhere between three and 12 months of expenses saved. Personally, I believe that the ideal emergency fund amount is different for everyone (but averages around six months of your must-have expenses), and depends on several factors:

  1. Whether you have dependents who are counting on you to financially provide for them – like kids, or aging parents
  2. What your job security looks like
  3. Whether you could easily find another job in your field with comparable pay and benefits in a reasonable amount of time
  4. Whether you have a spouse or partner who contributes to the family finances
  5. Whether your job provides health care for you and your family, or if you could potentially find health care through your spouse or partner’s employer

Whatever figure you land on, make sure that the emergency savings you’re building are accessible. Typically, a high-interest savings account is a good solution because it offers you the ability to gain some return while maintaining easy access with no penalties.

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Pay down your debt

Debt is one thing that most thirty-somethings are facing — and few are happy about it! While in your twenties, you may have realized that going to college or purchasing a new car required some level of credit, and by the time you’re in your thirties, you’re focusing on more aggressively paying it off.

After creating an emergency savings fund, paying down your debt should be your second priority. Debt, and the interest that comes with it, will only continue to negatively impact your net worth and your ability to start saving toward big-picture goals like purchasing a home or retiring. Often, a debt repayment plan focused on knocking out one line of credit at a time works best to help you stay motivated.

Look at your health care options

If you’re getting married or starting your family, it’s time to get a better understanding of your healthcare options. While the $20/month lowest-level health plan may have been fine when you were fresh out of college and sleeping on a friend’s futon, it may not provide adequate coverage for your family going forward. Weigh the pros and cons of different health plans. You have several different options available to you, so select one that balances the coverage you need with the price that’s right for your budget.

Think about your insurance coverage

If you’re single, or you’re partnered but don’t own property, you may think insurance is something you’ll get to down the road. But in many cases, you may have more affordable options if you buy when you’re young. Two insurance products to consider: disability insurance, and term life insurance.

Disability insurance can pay a portion of your salary if you experience an illness or accident. Life insurance could help cover your family’s financial needs if you were to die. You may have employer life insurance, but a personal policy ensures you’re protected even if you were to separate from that employer. Plus, life insurance is generally more affordable when you’re young and healthy. For example, a 30-year-old woman can buy a $500,000, 30-year Haven Term policy, issued by MassMutual, for about $34 a month. If she waited until she was 40, her premium may increase to $53 a month.

Consider your future

Other financial considerations right now are things that may or may not be in the cards for you and your family – namely, having kids or purchasing a home. If you’re looking to buy a home in your thirties, work to have a 20-25% down payment, as well as enough money to cover closing costs, any renovations, and any furnishing or landscaping you wish to do. It’s also wise to look for homes with a “right now” mentality. Purchasing your forever home might not be on the table at this time, and that’s okay — but that doesn’t mean that you should hold off on buying a home that could be great for the next few years.

If you’re considering starting your family (or if you already have) – congrats! Raising kids is an incredibly rewarding experience, but it can also be costly. Start outlining a “with kids” budget today, and put funds aside for kid-related expenses like daycare and medical bills.

What to focus on soon

You have a lot going on right now as a 30-something, but you’re going to have even more going on shortly. Planning for some not-so-distant financial milestones should be a part of your strategy.

Take a look at your retirement savings

By now, you probably have something saved toward your retirement. This might be through a workplace retirement plan, or it may be through an individual retirement account. However, if you haven’t started yet, you may want to consider doing so very soon. You can look at a few retirement calculators to understand how much you need to save or speak with a financial planner to create a retirement savings strategy. It’s in your best interests to be proactive on this.

Saving for your kids

Are your children in daycare, or do you think they might be in the future? And after that, college is right around the corner. It’s tough to imagine your toddler trying to choose a major, but you will probably want to make sure they have the chance to explore all of their options when the time comes. A good first step is to start a savings account for “near future” kid-related education expenses, like daycare or after school enrichment. Beyond that, you can begin to look at college savings plans or another tax-advantaged plan to help you to save for future education costs.

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Setting goals

By the time you’re thirty-something, you have some idea about what you want out of life and your career. While you’re in your thirties, you’re in the prime time of your career to set some BHGs (big hairy goals). This might mean you want to chase that exciting promotion at work. It may also mean that you strike out on your own and pursue entrepreneurship. Whatever your career goals are, it’s smart to align your career goals with your financial reality, figuring out plans for, how, say, you would be able to go back to school while your partner continues working, or for your partner to leap into entrepreneurship in a way that won’t put your finances in jeopardy.

Consider beginning estate planning

Whether you have kids already, you’re newly married, or otherwise, it’s a good time to start thinking about putting an estate plan in place. Estate plans help to define how your wealth will be handled after you pass away. While you’re in your thirties, you may not have accumulated a large amount of wealth yet —  and that’s okay. Your estate plan can still help to divide your assets, ensure that you’ve named beneficiaries on all of your accounts, and coordinate life insurance or death benefits that help protect your loved ones financially if you pass away unexpectedly.

What’s on the horizon

Although it may seem like you have enough on your plate as it stands, it never hurts to take a big picture view of your financial life. There are a few upcoming to-do items that, while not pressing, should be kept brewing, even if on the back burner.

Caring for your parents

As your parent’s age, they may need your help. Having these conversations in the middle of a family tragedy, like the death of a parent, can be challenging and stressful. Instead, make sure you understand each of your parents’ wishes now. For example, talk about whether they’re planning to move to be closer to you or one of your siblings as they age and need more help. You might also start the conversation with them about their estate plan so that you and your siblings know who their executor, or power of attorney, is when the time comes.

Health-related concerns

Do you have a history of health problems in your family? While they may not impact you now, it’s important to understand that they may cause hefty medical expenses in your future. Including a discussion of your insurance strategies as part of your overall financial plans, as well as having sizeable savings, can help you to protect yourself against overwhelming healthcare costs as you move through your adult life.

Planning your legacy

When you’re raising kids, growing your career, and enjoying life in your thirties, it can be tough to imagine living beyond the day-to-day. However, with time you’ll want to start developing a clear idea of the kind of legacy you want to leave. What influence do you want your life and wealth to have for generations to come? You don’t have to be working toward a huge goal like building a school or setting up a scholarship fund to have fun dreaming, while you’re still in your thirties, about the kind of impact you want to make on this world.

Just get started

Keep in mind that no matter what age you are, your financial life is a journey and not a race. Your life and priorities will evolve over time and may change weekly or monthly. The best thing you can do now is to just get started with one action item at a time.

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Mary Beth Storjohann, CFP® professional and Founder of Workable Wealth, is an author, financial planner and accountability partner working to help clients in their 20s-40s across the country make smart, educated choices with their money. Her recent accolades include the “Top 40 Under 40” by Investment News, “10 young Advisors to Watch” by Financial Advisor Magazine, and “10 of the Best Personal Finance Experts on Twitter.” She frequently appears on NBC as a financial expert, and her expertise has been featured in The Wall Street Journal, CNBC, Forbes and more. This article is sponsored by Haven Life.

Haven Life doesn’t provide tax, legal or investment advice. This discussion is intended as general education only. We encourage you to work with your own personal tax or legal professionals and your financial advisor. Opinions expressed by the author are their own and do not necessarily represent the views of Haven Life.

Haven Term is a Term Life Insurance Policy (ICC15DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Not all riders are available in all states. Our Agency license number in California is 0K71922 and in Arkansas, 100139527.

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