There's something about being in your 30s that feels more adult.
You may be making more money now and — after some trial and error — are better at managing your finances.
But that doesn't mean you're exactly where you want to be. You might still be paying off student loans and credit card debt. That 401(k) is set up, yet it still might not be at the level you'd hoped. But that's OK, says Daniel Sheehan, a financial planner based in Fresno. People in their 30s still have time to get their savings in line and start thinking about other things that felt less urgent earlier, such as writing a will and buying life insurance. "It's never too late," he says.
Here are a few goals to aim for:
Kick your emergency savings into high gear. For many workers, it'll be smart to have about six months' worth of expenses in the bank, advisers say. But the exact size of the fund will vary based on individual circumstances.
For instance, someone with unsteady income may need a bigger fund than someone with more predictable income. Likewise, someone with a mortgage might need more savings than someone with fewer financial commitments, says Scott Frank, founder of Stone Steps Financial. The point is that it might be harder to sell your furniture and move back with your parents if something goes wrong, especially if you're a parent yourself now. So save up.
Up your retirement savings to 15% of your pay. A good rule of thumb is to save close to 15% of your pay in a retirement account, including any match you might be getting from your employer, Sheehan says. If you weren't saving much in your 20s, however, you may want to save more than 15% to make up for that lost time.
Online tools can project future monthly income, according to how much you're saving today. Comparing how much money you have now and estimating how your expenses may change in retirement can give you an idea of whether you're on the right track, advisers say.
Start an investment portfolio. Once your emergency fund is set, try to avoid letting extra cash pile up in your bank account. Instead, invest that money to help it grow more quickly and give you a better chance of meeting your goals, be it saving for a down payment or for a wedding. Young people who mix up their investments by starting a stock portfolio or launching a small business, instead of focusing primarily on a house, can set themselves up for greater financial stability in the long run, says Bill Emmons, senior economic adviser at the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis. Advisers recommend against investing money in the market if you'll need it in the short term, or within five years.
Be (mostly) debt free. You may have made a dent in your student loans and paid off any outstanding credit card debt by now. But if you haven't, it's not too late to get serious about tackling that debt, says Karen Carr, a financial planner with the Society of Grownups, a Boston-area company that offers financial planning for millennials. For credit cards, make extra payments on your highest-interest debt first, she says. Try to keep each card balance below 30% of the available credit limit, especially if you plan to apply for a loan. A balance above that threshold may ding your credit score.
Keeping your credit score up and your card balances low can also help you qualify for attractive rates on other loans, such as auto loans and mortgages, Frank says. Some people with large student debt loads may qualify to refinance those loans to a lower rate if they have good credit and steady work, Frank says.
Write a will and prep other legal documents. Most people know they should get serious about writing a will after having children. But wills also become more important as you build your savings and assets, Sheehan says. While you're at it, write up a healthcare proxy that explains your medical wishes and who should make medical decisions in your place. As a rule of thumb, revisit the paperwork at least every five years, he says.
Get your insurance in line. Health insurance isn't the only kind of coverage you might need at this point. Find out whether your job offers short-term disability coverage, which would cover you if you became unable to work for several months because of an accident or medical condition. It's standard for policies to replace about 60% of your pay, so if that isn't enough to cover your bills, think about upping your savings or buying a supplemental disability policy.
Your 30s are also a time to think about life insurance, which would cover a spouse, a child or a parent who may rely on you for financial support, Sheehan says. And in couples where only one spouse is working, it should not be assumed that only the working spouse needs a policy, Sheehan says. A stay-at-home parent might also want to buy a life insurance policy for their child, since the surviving spouse might need to pay for child care — costs that can add up to tens of thousands of dollars per year.
Marte writes for The Washington Post.