10 Money Moves You Need to Make in Your 30s

Money Moves to Make in Your 30s

By Maryalene LaPonsie

We're back with the next installment of our Financial Planning Through the Ages series, offering our top tips on how to manage your money and prepare for retirement during every decade.

It's time to talk to you 30-somethings. At 37, I'm in the thick of this decade myself and can attest to the fact that life is much different now than it was 10 years ago. After spending our 20s getting acclimated to adulthood, we finally have our sea legs. Or at least, many of us do.

You may be married. You may have kids. You may have a house. You may be making more money than ever.

Regardless of the particulars of your current life, here are 10 money moves we should all be making during this decade of our lives:

1. Revisit your retirement savings. By this point, you should have a retirement fund, whether that be a 401(k) or an IRA. If you don't, getting one set up should be priority No. 1 in your life this week.

For everyone else, it's time to pull out your most recent statement and take a look at where your money is invested. Over time, our retirement account can fall out of balance. We may have too much risk or, more likely for those of us in our 30s, we may have too little risk. Remember, you likely have 30-plus years left in the workforce, so you can afford to have money in more aggressive funds that carry the potential of bigger returns.

Review our article on how to manage your 401(k) in a minute. If you've changed jobs at any point, you should also look at doing something with your orphaned 401(k).

2. Increase your emergency fund. In theory, creating an emergency fund is another money move you took in your 20s. If you don't have one, putting money aside for a rainy day is priority No. 2 for you, right after you set up that retirement account.

However, let's assume you did create an emergency fund in your 20s. It's probably time to up the balance now. You've probably moved out of the studio apartment. You may have a family to feed. You possibly financed a couple of purchases along the way.

Your emergency fund should have enough money to cover three to six months' worth of expenses. Add up all your current must-spend monthly expenses and see if your fund falls short on covering them. If so, it's time to beef up the account.

3. Rebalance the budget. How long have you been living on the same budget? Ideally, you should revisit your budget at least once a year or every time you have a major life change. If it's been a while since you crunched the numbers, sit down with your significant other, if you have one, and do a thorough review. Here are a couple of questions to help guide the discussion:
  • Does your current budget support your life goals?
  • When is the last time you shopped for better prices on expenses such as Internet and insurance?
  • Are you spending money each month on items that don't fit any of the current budget categories?
  • Can you eliminate any categories at this stage in your life?
4. Track your spending for a month. Oh, you don't have a budget, you say? Well, that's a shame. Let's work on correcting that.

The best way to create a workable budget is to track your spending for an entire month. Keep tabs on every penny. That sounds like a lot of work, but if you use your debit card or a credit card (that you pay off at the end of the month) for everything, it's not so bad.

Actually, let's all make this money move, regardless of whether we have a current budget or not. We tend to idealize where our money goes ("Oh, I never eat out!"), but once you start tracking, there's no denying that you hit the drive-thru once a week or go on a spending spree at the mall once a month.

So keep track of your money in June and then compare your actual spending to your budgeted amounts. Depending on where the numbers land, you're going to either need to rework the budget or rethink your spending.

5. Pay off your debt. Of course, we all wish we had never gone into debt in the first place, but there's no use in rehashing past mistakes. Now is the time to take action and correct them.

Cut up the credit cards and then go read about eight smart ways to pay off debt fast.

6. Perfect the fine art of haggling. In your 30s, you'll likely be making some major purchases. You may also have more discretionary income to buy the things you want.

You can stretch your dollars further if you learn how to bargain like a pro. There's no reason to pay full price when a few simple techniques can help you save money on purchases big and small.

No need to worry about looking cheap or unreasonable either. Haggling doesn't have to equal a high-pressure conversation. I'll let Stacy Johnson explain further in his confessions of a serial haggler.

7. Consider starting a college fund. For those of you with kids, your 30s are a good time to set up a college fund. Don't wait until the kids hit high school to have a plan for higher education.

Personally, I recommend 529 plans, but you could also put money in a Coverdell education savings account or buy a prepaid tuition plan. You could even use the principal investment from your Roth IRA to pay college expenses, although pulling from a retirement fund should be no one's first choice.

Even if you don't have kids, you may want to start a college fund for yourself if you think you'll eventually want to earn a second or graduate degree.

8. Re-evaluate your career trajectory. How's that job going? Is your line of work all you'd hoped it would be?

Your 30s are a good time to re-evaluate your career path. If you decide you hate your job, now might be the best time to make a change. You're still young enough that you could go back to school and recoup your investment. That said, going back to school may not be necessary to change fields.

Sit down with a trusted adviser and carefully consider your options. Maybe you like the line of work but want to shift responsibilities or move up the ladder. Start with your end goal and map out, in reverse, all the steps you need to take in order to get there.

9. Upgrade your insurance coverage. Reviewing insurance coverage is another money move to make in your 30s.

If you have a family, you need to have enough life insurance to replace your income should you prematurely leave this world. Likewise, you'll want to have disability insurance if you're the family breadwinner. Super high-deductible health insurance may not make sense anymore either if you have kids who may be prone to ear infections or the occasional broken bone.

You'll also want to double-check your home and auto insurance limits. Once you've traded in that beater for a nicer vehicle, you may want to have comprehensive coverage. For your home, check with your insurer to see whether valuable items are covered by your policy or you need a separate rider.

10. Keep your eye on the prize. Finally, don't get caught up in what you think life should be like in your 30s. It's easy to look at friends and neighbors and try to duplicate what they do.

My experience has been that this is especially true where our kids are involved. If everyone around us has kids in sports or dance or 4-H, we might feel like we need to do the same for our kids, lest they miss out. Same goes for vacations. Maybe you feel obligated to take your kids on a big summer vacation each year because, well, that's what good parents do.

Rather than live according to society's standards for the good life, live according to your own standards. Keep your eye on what's a priority to you and your family and only spend your money on those things that further your personal and household goals. It's OK to take the big vacation or buy a fancy car if you can afford it, but do so because it's important to you, not because you think it's expected of you.

That wraps up our top money moves for your 30s. I'm handing the torch to Donna Freedman, who will pick up next time with the best moves for 40-somethings. If you have tips for folks in their 30s, be sure to share them with us in comments below.
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