Financial Benchmarking: Where You Should Be (Financially) in your 30s

In my latest podcast episode, I’m sharing my top 3 financial tips to kickstart an abundant future in your 30’s. Things like …

Building a strong financial foundation in your thirties by managing cash flow, saving for emergencies, paying off debt, and planning for retirement.
Investing in yourself by advancing your career, increasing income potential, and pursuing professional development.
Not overlooking life insurance and estate planning, even if you’re young. These steps ensure financial security and peace of mind.

Discover valuable insights to thrive financially in your 30s. Tune in now

Show Notes:

Hey there! Welcome back to “The Heart of Your Money,” episode number 96. Today, I’m going to share some important milestones for thriving in your thirties, building a solid foundation for your financial life. Whether you’re just starting out or already on your financial journey, this episode will provide valuable insights and tips to help you get a boost and start strong.

Your thirties are an exciting time to begin thinking and talking about money, making plans, and investing in your financial education. Although it may feel like a long time ago for me, I still remember the significance of this decade. It’s a period of growth and opportunity. Personally, I still feel internally stuck in my thirties, even though I’ve experienced many life events since then.

Looking back, I wish someone had laid out these milestones for me. Think of this as a clear and easy checklist to kickstart your financial journey. You won’t be able to tackle everything at once, but these points should definitely be on your radar. Consider putting them as a reminder on your fridge, just like I did. Having a visible list helped me accomplish my goals in the financial world, career-wise, in my family life, personal development, and even travel. This can be a great starting point for you to add to your own checklist. Also, feel free to share this episode with your adult children or anyone in their thirties who can benefit from it.

So, how do you build a strong foundation in your thirties? It starts with knowing your income and expenses, your cash flow. Sticking to a budget and spending within your means is vital. To stay within your means, you need to be aware of what’s coming in and what’s going out. You don’t have to track it daily with a little book, but at the end of each month, take a look at how much you earned and how much you spent. This will serve as your starting point.

Another crucial aspect is establishing an emergency savings fund. Aim to save three to six months’ worth of income. This is a habit that should continue throughout your life. Your relationship with money is the longest one you’ll have, from your youth to your last breath. Therefore, treating your emergency fund as a lifelong commitment is essential.

Paying off high-interest debt, such as credit cards or student loans, should also be a priority. Develop a plan and be strategic about debt repayment. Having a clear plan in place and automating payments can alleviate the stress and overwhelm that often come with debt.

It’s also important to start tracking your credit score. By the age of 30, it’s beneficial to have established a good credit history. Pay your bills on time, keep your credit utilization low (avoid maxing out your credit cards), and maintain a healthy credit score. This will be advantageous if you plan to apply for loans or a mortgage in the future.

Now, let’s address a common question: Should you start an emergency savings fund while still paying off debt? The answer depends on your personal situation, but as a general rule, it’s advisable to develop the habit of saving for emergencies, even if it’s a small amount like $25 or $50. It may seem insignificant, but it builds the muscle memory of saving and sets you on the right path. It’s like laying the foundation for a house. As you pay off debt, you can increase your savings contributions. The key is to start and stick with the habit, even if it’s a small amount.

Furthermore, it’s never too early to start saving for retirement. By the age of 30, consider establishing a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA) dedicated to long-term pension savings. Regular contributions and takingadvantage of compounded growth will benefit you in the long run. We call this strategy dollar-cost averaging. Even though retirement may seem distant, starting early will make a significant difference in the future.

In 2022, we experienced a market downturn, with equities and the MSI Growth World Index experiencing a significant decrease. This is actually a positive thing for individuals in their thirties. It presents an opportunity to invest and take advantage of lower prices.

That’s when wealth is created—through regular contributions, just like paying your cell phone bill. Make monthly contributions to your Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA) and take advantage of buying quality investments at discounted prices during market downturns.

Now, let’s shift gears and talk about investing in yourself. By the time you reach 30, you’ve likely gained some work experience and advanced in your career. Focus on increasing your income potential through professional development, further education, or seeking new opportunities aligned with your long-term goals.

This is the time to consider pursuing a master’s degree or developing strategies for negotiating salary increases and promotions. Women, in particular, may face challenges in speaking up and asking for what they deserve. Use your thirties to work on building confidence in this area, as it will pay off in your forties and fifties.

Additionally, think about starting a side hustle to create additional sources of income. You have the energy and drive in your thirties to explore new opportunities and maximize your earning potential.

Now, let’s address a commonly overlooked aspect for young people—life insurance. Although you may not have dependents or significant financial obligations yet, this is the perfect time to consider life insurance. By obtaining a policy in your twenties or thirties, you can lock in a low premium until you’re 65, taking advantage of your youth and good health. Life insurance may not seem necessary now, but it provides financial security and peace of mind for your loved ones.

Similarly, don’t forget to think about creating a will and power of attorney. Although it may feel unnecessary, it’s a thoughtful gift to your family. Simplify the process by using online platforms that offer affordable and accessible options for creating a will. Even if it’s just you and your circumstances are straightforward, taking care of these legal matters will make things easier for your family in case of an unfortunate event.

Lastly, take the time to map out your goals and aspirations. Whether it’s a wedding, homeownership, starting a family, or pursuing further education, plan how to achieve these milestones financially. Having specific goals will guide your financial decisions and provide motivation.

To enhance your financial knowledge, I recommend reading books like “The Wealthy Barber” and “The Psychology of Money.” Arm yourself with information and seek the assistance of a financial expert to help you navigate your financial journey.

Remember, it’s never too late to take control of your finances and plan for a brighter future. If you have any questions, feel free to reach out to me at [email protected]. Take care!