Financial Planning in Your 30s (Thirties)

When it comes to personal financial planning we hear the same advice day in and day out: Start in your twenties. The funny thing about this advice is usually we ignore it in our twenties and start to pay attention in our thirties. This leaves most of us thirty-somethings feeling a little behind, and we are so the time to act is now!

Of course starting as early as possible is a great idea, but not everyone does it. There is some good news about starting in your thirties though. For most of us when we turn thirty, give or take a few years, a financial light bulb goes on. You realize there's more to life than the trendiest pair or jeans or the coolest new car. That's why your third decade on this earth is a great time to objectively look at your finances and take some steps to plan for the future. Here are a few areas to focus on:

SAVINGS

Pay yourself first. How many times have we heard personal finance experts say this? More importantly, did we listen when we heard it? Paying yourself first means habitually saving a set portion of your income. Experts suggest a figure between 10% and 30% of your income but the amount isn't important, making it automatic is. If you have direct deposit you can usually set your deposit up so a portion is automatically deposited to a savings account.

DEBT

Nothing sinks a financial plan faster than a ton of debt. If you're lucky you didn't accumulate much debt in your twenties. If you're like most of us you weren't so lucky and have some credit card balances and student loans that could use a little trimming. Start with the high interest debt first which usually means your credit cards. Pay as much toward these and you comfortably can and when you finish paying one, move on to the next. The goal here is to exit your thirties with mortgage debt only.

RETIREMENT

Retirement planning is where starting early can make the most difference. If you don't already have an IRA, Roth IRA, 401K, or other retirement account open on today. If your employer offers a 401K plan and matching contributions you should make sure you are contributing enough to receive the maximum level of matching from them. Compound interest is the reason starting early is important here. If you deposit $1,000 in an account earning 5% interest and contribute an additional $100 each month you will have almost $90,000 in 30 years. Powerful stuff!

INSURANCE

Insurance should be appearing somewhere on your radar also. Hopefully your employer takes care of your medical insurance at this point so we'll focus on other types. Make sure you have adequate auto, home, and life insurance policies to protect you and your family. An experienced insurance professional should be able to help you evaluate your needs and recommend sufficient coverages. And remember, although you are only thirty and most likely as healthy as an ox, life insurance protects your family's financial situation in the unlikely and unfortunate event of your death.

SPENDING

This is a big one and changes here can have tremendous effects on the areas above. Take a look at where your money is spent and cut out as much waste as possible. The great thing about doing this now is you will be much more comfortable eliminating waste, such as eating out too often, than you would have been in your twenties. The key for most of us is cutting out the daily costs. Treating yourself to a Grande Mocha from time to time is completely reasonable, but brewing your coffee at home most of the time and saving that $4 per day spent at Starbucks is the smarter choice.

GOALS

More important than and individual financial decision is sitting down and setting long term goals for your finances. This doesn't mean setting goals for the next year. It also doesn't mean setting goals for the next ten. Long term financial goals should deal with the rest of your life, not just a specific period of your life.

Getting an early and fast start is great advice, but the most important part of any financial plan is having one. By taking steps in your thirties to address your finances and developing some long term goals you will be able to overcome any ground you may have lost by not starting in your twenties. Remember, the rabbit might have led the race but the turtle crossed the finish line first. Slow and steady my friend, slow and steady.