Personal Finance Tips: How to Build Wealth in Your 30s
For some your 30s is the point of when life tends to slow down. You have a stable job. Maybe you’re ready to get married or have kids. Or if that’s not what you want then you’re single and thriving. But mainly your 30s is there to help set you up for your retiring age.
Time flies by fast and before you know it, you’re in your 50s. Ready to retire and live out the rest of your years on some island in the Caribbean. Although, that would be great if you had the money, right? You did some not so money smart decisions and can’t afford it. Well, it’s not too late to gain some money in your 30s. Life doesn’t stop, it just becomes a bit more complicated.
In this article, we will find out the best ways for you to build your wealth in your 30s. Being wealthy isn’t just a short-term investment. It’s something that should be taken for the long haul. So not you may be asking yourself. “So, how do I build my wealth in my 30s?”
Spend Less Than You Make
Many people as they get older tend to make more money. Well, that’s how it supposed to go, but it’s not always the case. Either way, your income is going to be enough to hopefully support you. But as you make the money, you’re spending the same amount that you make. This term is called lifestyle inflation.
It’s great to want to be able to spend money. After budgeting and multiple jobs, you want to spend money on small luxuries. Things you couldn’t afford before, but you can now. the problem is when you put those extras before the overall health of your financial life. Some people will even find themselves still feeling broke and unable to save money even when their income allows for it.
Keep a budget: Your budget will help you prioritize paying off high-interest-rate consumer debt and making regular contributions to your retirement savings.
Be smart about how you reward yourself: Rewards motivate you to keep working hard, but instead of thinking you need a new car or expensive vacation, think about a nice dinner out or a special bottle of wine.
Stop trying to keep up with your peers: I say this a lot about people in their 20s, but I still see it in my 30s – we love to compare ourselves to others our age. Don’t let how your peers spend their money influence how you spend yours.
Gradually increase your spending: When you do start spending more on extras (as long as you’re still meeting your savings goals), make incremental changes. For example, instead of buying all new furniture for your entire house, focus on one room or one piece of furniture that needs to be replaced.
Regularly contribute to your retirement account
Here’s the hard truth: Being in your 30s means you’re about halfway to retirement age. No more are the days of an all-nighter and going to the clubs. Come the days of quiet nights watching Jeopardy or Wheel of Fortune. If you actually want to retire one day, you need to be making regular contributions to your retirement savings and investing in your 30s.
Retirement accounts build your savings using compound interest, which is the process of earning interest on interest. It’s how you see exponential growth in your savings. With compound interest, time is on your side.
Set long-term goals: Think about what you want retirement to look like so you know how much you need to save.
Understand compound interest: Learn more about how it works and why it’s such an important factor.
Review your options: This is how you will draw retirement income – an employer-sponsored retirement plan, IRA, pension, etc.
- Check your company benefits: Learn how to review your company’s 401(k) and how to approach them when you start and leave a job.
- Learn about Social Security: Most 30-somethings won’t be able to rely on Social Security, but it’s still important to make sure you understand it.
- Start budgeting and saving: This is how your current income and spending can affect how you save for retirement.
- Adjust your goals as needed: As your life changes, so will your retirement plans.
Keep an eye on your credit score!
Your credit score is one marker of your financial health and how lenders determine how risky it is to let you borrow money. The higher the risk (low credit score), the more expensive it is to borrow money. The lower the risk (high credit score), the less expensive it is to borrow money.
Having a decent credit score is increasingly important in your 30s if you’re thinking about buying a new house, refinancing your mortgage or student loans, or taking out any other kind of loan. Because your credit score directly affects the interest rate and terms of your loan.
Pay yourself first.
This is the kind of personal finance advice your parents may have given you, and you’ve probably seen it mentioned in other places, too. It’s one of those things that seems too simple to be effective. The reality is that it’s one of the most effective ways to save money.
Here’s how it works: every month before you pay any other bills, put some money in savings. That’s before you buy groceries, pay your mortgage, and even before you make your student loan payment. It’s like skimming a little money off the top. Instead of waiting until the end of the month to save what’s leftover, you save first. You’ll be surprised at how much effective your budgeting is.
Consider day trading
Interestingly, many people in their 30s are taking up the skill of day trading.
As economic shifts continue, trading academies, especially for beginners, have gained attractiveness.
This kind of personal wealth-building practice places “financial control” in the hand of newbie traders. Long gone are the days you have to pass a Series 7 to become a trader.
Unbeknownst to many people, day trading isn’t as difficult as some may think. With the right financial training, long-term success is highly possible. Cryptocurrency, stocks and Forex are only a few ways people in their 30s are building wealth.
Start an online business
It’s amazing the amount of successful 30-year-olds breaking into higher tax-brackets. This isn’t to be frowned upon; rather, to be admired and respected.
During and following the pandemic, for example, a large percentage of 30-somethings have started online businesses to either supplement or replace their income. The goal is to build both short-term and long-term wealth.
There are several online businesses to choose from, and here are some of the most popular:
The above list of online businesses is merely a couple of examples that 30-year-old men and women are using to build wealth.
Video: 5 Great Financial Goals to Conquer in your 30s
Your 30s are a time to solidify necessities for the future. Because as you get older there won’t be much left you can do. So, start to make those financial moves now. Wouldn’t it be great to be the wealthy 60-year-old drinking margaritas on the beach? It sounds nice, right? Well, the only way to hit that goal is to start taking action now.
Ellard "Coach Ell" Thomas is an author, life coach, motivational speaker, and the founder of Power and Success Ministries--an organization devoted to the personal and professional advancement of all people. If you're looking for motivational messages or resources for combating hardships, visit us today!