This article was written by PJ Wallin of Atlas Financial. PJ and I became friends after meeting at an industry conference and I asked him to write some thoughts on financial goals as a guest topic for this site.
If you’re in your 30’s, you’re at that age where you’re old enough to know it’s time to take some serious strides toward your financial goals and still young enough for long-term planning to have an impact.
Once you reach your 30s, you’re likely earning a higher wage, you’re more established in your career, and may have or are planning to have a family. This is also that time when your priorities tend to shift to more long-term financial stability versus the short term goals you may have set and overcome in your 20s.
So what are some of the financial goals you should be setting for yourself in your 30’s? Here’s a list of five goals every 30 something should work toward.
- Max Out Your Retirement Contributions
Yes! This is huge, because right now you are likely hitting your peak earning potential and will benefit from maxing out retirement contributions. If you have a 401(k), IRA, Roth IRA, SEP, TSP or any other type of retirement account, max it out so that you can take full advantage of the compounding interest that your income will earn the earlier you save.
The more you save now at this stage in your life, the harder your money will be able to work for you leading up to your retirement.
- Build Up an Emergency Fund that Covers 6 Months to 1 Year of Living Expenses
You likely already have an emergency fund so that you can cover rainy day expenses, those unexpected but possible costs that can occur at any time. Beef it up even more and make sure you have a minimum of six months’ worth of living expenses handy. In your thirties, you are at an age where you can be impacted by economic changes resulting in the loss of employment. If you have a family or are planning a family, it’s more important than ever that you have enough money saved to cover your living expenses so that you can focus on finding a new job if necessary. It’s also possible that one of you may take extended time away from work while you start a family. If you are accustomed to having two incomes, it can be very hard to operate on one income without a cushion to support you in the interim.
- Pay Off and Avoid Further Debt
It’s time to live within your means. If you were overspending your income in your twenties, chances are you learned your lesson. High interest payments do nothing but eat up financial resources that should be going toward other things. Pay off any credit cards as quickly as possible, starting with your highest interest debts first. Pay off your car loans, student loans, furniture loans – whoever you owe money to, pay them back as quickly as possible so you are indebted to no one.
The goal in your thirties should be to have zero debt except for your mortgage. This will provide you with the freedom and flexibility to focus on life goals that are more important. And once you are out of debt, stay out of debt.
- Get Life Insurance
The earlier you get life insurance, the lower your premium payments will be. And more importantly, having life insurance helps to protect your family from financial hardship in the event that you pass away prematurely. I know it is not pleasant to think about mortality, so just focus on their well-being instead.
- Get On a Cash Flow System
Your thirties can prove to be an incredibly busy decade of your life, filled with life changes, children, large purchases, and career advancement. In order to stay on track financially, having a clear plan with where you directing all your money will help to hold you accountable to your financial goals and provide you the freedom to spend what’s left over without worrying.
A cash flow system can help you to automate your spending on fixed categories like savings and fixed costs, anticipate regular fluctuating costs like gas and groceries, and then make the rest available to you and others in the family to enjoy. You are in your thirties after all, it can’t be all work and no play!
About the Author: PJ Wallin is the founder of Atlas Financial, a fee-only financial planning, investment management, and tax services firm located in Richmond, Virginia. Atlas uses an all-inclusive approach provides a clear overview of your financial potential and gives you the comprehensive support necessary for peak success.