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Financial Advice Series - Thirties

Financial Advice Series - Thirties

May 15, 2024

Your thirties are crucial for making financial decisions that will affect your future. This is when you may settle down, start a family, or even consider buying a home or starting a business. Here are some important financial decisions that you should consider in your thirties:

 

Pay Off High-Interest Debt

 One of the most important financial decisions you can make in your thirties is paying off any outstanding high-interest debt. This includes credit card debt, student loans, car loans, and other high-interest debt. The longer you wait to pay off your debt, the more interest you will accrue, and the harder it will be to pay off. On the other hand, low-interest debt instruments, such as a mortgage, can be worth leaving open.

 

Build Your Emergency Fund

 Another important financial decision you should make in your thirties is to build your emergency fund. An emergency fund is a savings account that you can use to cover unexpected expenses such as medical bills, car repairs, or home repairs. You should save at least three to six months of living expenses in your emergency fund. Hopefully, you created this in your twenties, based on your expenses then. Most likely, your expenses have increased in the past decade, so your emergency fund should increase proportionally. If you are looking to start a family or have a less stable job, it would be prudent to lean towards six months rather than just three months.

 

Invest for Your Future

 Investing in your thirties can be an excellent way to secure your financial future. You can invest in the stock market, bond market, real estate, and other investment vehicles. The earlier you start investing, the more time your money will have to grow. Consult with a financial advisor to determine the best investment strategy for your needs.

 

Save for Retirement

 Saving for retirement is another important financial decision in your thirties. You can contribute to an employer-sponsored 401(k) or open an individual retirement account (IRA). The key is saving as early as possible to use compounding interest. Hopefully, you started a Roth IRA in your twenties. You should consider opening a taxable investment account if you have been phased out of Roth IRA contributions by income or have more to invest than the annual Roth IRA maximum ($7,000 if you are under 50 years old in 2024).

 

Consider Buying a Home

 Buying a home can be a great investment in your thirties. Homeownership can provide stability, tax benefits, and the potential for appreciation in value. Additionally, ensure you can afford the mortgage payments and other associated costs before buying a home. However, homeownership is not for everyone. If you move every few years, renting likely would make more sense.

 

 

Start a Business

 Starting a business can be a great way to increase your income and build wealth. However, it can also be risky and require much hard work and dedication. Ensure you have a solid business and financial plan before starting a business.

 

Evaluate your Insurance Coverage

 As we age, the likelihood of something unexpected happening increases. Furthermore, as you start or grow your family, more people depend on your ability to continue earning income. Fortunately, if you are healthy and don’t smoke cigarettes, a long-term life insurance policy is still relatively affordable. Additionally, if you are not covered by your employer, looking into disability coverage is prudent.

 In conclusion, your thirties can be crucial for financial decisions affecting your future. By paying off debt, building an emergency fund, investing in your future, saving for retirement, buying a home, starting a business, and protecting your assets, you can set yourself up for financial success.