Thirty was so strange for me. I’ve really had to come to terms with the fact that I am now a walking and talking adult. -C.S. Lewis
Thirty might be the new twenty, but as C.S. Lewis says, by your 30s, you are a walking and talking adult.
Make wise decisions in your thirties, and you can set yourself up for financial stability to last a lifetime. While there are thousands of things you could do, here is a short list of five things you should consider as part of your financial planning for today and tomorrow.
1. Get the right insurance
Did you know at age 30, you are four times more likely to become disabled and need disability insurance than you are to die before you turn 65?
Short or long term disability can devastate your financial plan. Consider a scenario where you type for a living and then injure your hand in an auto accident. It might take a few months or a few years to recover. Protect your income with the proper disability coverage.
Please don’t assume that Social Security will be enough to take care of you. It’s especially true if you make $100,000/year or more, or have a family that depends on your income.
You can find policies that have a 60–90 day waiting period before benefits kick in, which will lower your premiums. Policies should pay roughly 60% of your gross compensation and last until you are 65–67.
Be sure you know if you are getting “Own Occupation” which will pay out if you can’t do your current job or “Any Occupation” which will only pay if you can’t work at all.
Review your current health, home, life, and auto policies as well and make sure you have the right coverage for your needs.
Remember that a life insurance policy should cover things like your mortgage, credit card, and any student loan debt you have since those will transfer to your spouse.
2. Become debt free!
In your 30s, you are likely working at a career level job and perhaps have a spouse who is also working. Take the opportunity to pay off debts.
Start with unsecured debt, such as credit card debt, and then move to the debt with the highest interest rates.
Financial freedom and peace of mind can come from ridding your life of future interest payments. It is easier to change jobs, take a risk on starting a new business, or going back to school if you don’t have debt hanging over you, taking every last dollar you earn.
3. Share the load
Schedule regular talks with your spouse about your finances. Don’t allow either spouse to become uninformed about financial matters.
We all fall into regular patterns when it comes to finances, but it is important that both people are on the same page and can reach toward similar goals if you want to achieve them. Be open and honest about financial situations and make it a regular occurrence.
The more transparent you are about money and spending, the less likely it will be to fight and argue about financial issues.
These meetings can cover everything from staying on your budget to reviewing your insurance, to covering important documents such as your current list of accounts.
4. Take care of the kids
If you have children or plan on having them soon, consider starting a college fund for them now. Some states have tuition freeze funds and different 529 plans in place that help those who start saving early.
In its most recent survey of college pricing, the College Board reports that a ‘moderate’ college budget for an in-state public college for the 2014–2015 academic year averaged $23,410. A moderate budget at a private college averaged $46,272. – College Data
College prices are growing at a rate much faster than inflation. Hopefully, this will change over the next 15–20 years as your children grow up, but putting aside money now will help them avoid college debt and give them the freedom to choose a good school.
Putting aside money marked for college will also help prevent you from raiding retirement accounts later in life to assist your children with tuition.
You might say that your children will be on their own for college, but you might change your mind over the next decade. Don’t put your retirement at risk – save some for them now.
5. Rely on a good team
Life in your thirties is more complex than your twenties. You now own more things and might have more relationships (spouse, children, etc.). As life progresses, it will only get more complicated.
Find and rely on trustworthy, good people to help you.
- find a trusted insurance agent to help you find the right disability policy
- a certified financial planner who is fee-only might be a good way to manage your investment choices and taxes
- if you are running your own business or plan to, find a good attorney to help you structure things correctly.
Don’t be afraid to ask for personal recommendations and to interview these potential financial helpers.
It is ok to NOT hire your 2nd cousin over someone who comes well respected in the industry. Asking to meet and ask questions of someone who will be handling such important aspects of your life is very reasonable.
If you are going to be working with someone such as a CPA, attorney, or financial advisor, allow yourself the time to pick a trustworthy and solid financial partner.