Good financial planning advice for your 30s..
When you are 30 something you are probably beginning to reap the rewards of your study and hard work with a bigger salary. If you started a retirement fund in your 20s, then good financial planning advice in your 30s is to keep it up, if you haven’t you better not wait much longer. Add to your 401k and IRA accounts with contributions through your 30s. Most experts agree that you should be investing/saving around 10% of earnings by this stage in your life. By proactively learning to control your own investments you can avoid being scammed and save a great deal of money on brokerage fees and financial advisers.
If you are in your 30s and have not yet started to save and invest for your future then the only good financial planning advice is to start NOW! You will have to save more than 10% to make up for lost time. Most Americans change jobs several times over the course of their working lives. Do not waste time and money by allowing periods of non-contribution to your 401k to occur with new employers.
Good financial planning advice in your 30s has the following three aspects in priority order.
- First – pay off any outstanding debts and live within your income. Unsecured debt such as credit card balances that carry over from month to month are very expensive. The interest rate that you pay on debt far exceeds the interest that you earn on savings. So pay it up as soon as you can and avoid it from then on.
- Second – maximize your retirement fund savings in your 401k or IRA. The tax deferment benefits are excellent so time spent without contributing or contributing less than the maximum is like refusing to take free money.
- Third – add to your home equity balance whenever possible. This saves you large amounts of interest on your mortgage.
Most Americans buy their first homes when in their 30s. They also probably see this real estate as an investment that will appreciate in value and contribute to their retirement income when that time comes. For your home to be a good investment you need to think in terms of the equity you have in it. This is the actual amount of money in your home value that is yours and not a mortgage. It is best to minimize your mortgage when you first take it on by maximizing your deposit and paying cash for the set-up and administration costs. A good idea is to then take any salary increases you get and increase your mortgage repayments or continue with repayments at high interest levels even when the interest rate goes down.