How To Make the Most of Your Money in Your 30s
It’s easy to get caught up in the daily challenges of building your life and career as a young adult that you forget to take a hard look at your finances.
Your 30s are a critical time to learn new money skills that would allow you to take better control of your finances. Learning how to grow and protect what you have doesn’t happen overnight, though.
It takes a lot of time and discipline to become money-wise at a young age. Sometimes, you learn the hard way through financial mistakes.
To help you out, we’re here to share some financial tips to guide you through saving, avoiding debt in your 30s, and building a solid plan for your future!
1. Increase your emergency funds
A huge part of financial planning for young adults is learning where to stash away extra money.
Emergencies are notorious for draining your entire savings in a short amount of time, so it makes sense to start building your emergency while you’re young.
If you don’t have one yet, you’ll likely dip into your savings or use credit cards to pay for unplanned purchases.
Meanwhile, if you started an emergency fund in your 20s, now’s the perfect time to revisit your savings goals. As your expenses increase, so should your emergency funds.
Another important financial tip is to reconsider where you’re keeping your emergency funds. Ideally, rainy day funds should be kept in an accessible account for quick access in case of an emergency.
Just a reminder that emergency funds should be able to cover at least 6 months of your expenses. Of course, how much you can save still depends on your financial situation.
2. Prepare to buy a home
One way or another, you’ll need to buy your own house in the future, so it’s better to start saving for it as early as now!
When purchasing a home, the first two things you have to consider are the down payment and your credit score.
You’ll need a good credit score in order to qualify for a mortgage in Singapore. The higher your credit score, the lower your interest rates will likely be.
That’s just one of the many benefits of having a good credit score in Singapore, so make sure that you’re settling your loan repayments and credit card dues on time.
When it comes to the down payment, you’ll need at least 25% of the property value when using a private bank loan, 5% of which must be in cash.
There’s no other way around your future home’s down payment than to prepare for it while you’re young.
Setting aside money for down payment, even in small amounts, can make your mortgage more manageable and perhaps give a leeway to get a more expensive home in the future.
3. Start planning for retirement
It’s worth noting that being 30 means you’re halfway closer to retirement. Many people who enter this age either have nothing on their retirement funds or are making little to no contributions.
If you want a comfortable and secure retirement life, then there’s no better time to start pouring in those savings than now. Don’t wait for that promotion or more leeway in your budget!
By age 30, a retirement plan that’s worth at least your starting salary is a great place to start. And by the time you’re 35, your retirement savings should be at least twice your annual salary.
These numbers are merely benchmarks, but they can help you gauge if you need to give your retirement contributions a boost. According to financial planning experts, a good retirement contribution target is 15% of your yearly income.
4. Spend less than you make
The general idea is that we start to earn more as we get older. However, when we start to earn more, we usually spend more to match our income.
While there’s nothing wrong with splurging a little more on yourself, the problem is when you prioritise these unnecessary expenses over more important matters. Something that often happens to young adults is when their paychecks couldn’t keep up with their lifestyles.
Being smart about how you reward yourself is the best way to avoid this. Instead of thinking you need an expensive vacation or a new phone after working hard, think about rewarding yourself with more affordable options like a nice dinner or treating yourself to a massage.
5. Balance your long-term financial goals
No doubt that being a young adult is filled with massive financial changes, from learning how to budget an entry-level salary to having to pay your own rent and bills.
The ideal way to address these changes is to look at the bigger picture and focus on your financial goals.
Let’s say you want to have your own home or take your loved ones on vacations in the future. You can start by calculating how much you’d need to set aside each month to accomplish each goal by a certain age.
Then, take a good look at your finances to see if you’re overspending and determine which aspects you’ll need to cut back on.
For example, if you’re dining out with friends almost every weekend, maybe you can cut this down to once per month! You’ll be surprised by how much you can save after a month.
6. Start investing (in yourself)
Your 30s are the perfect time to embrace the stock market to grow and protect your wealth for retirement, but it’s not the only investment you should be doing.
Investing means learning how to take care of yourself, too. You can start by breaking bad habits such as not sleeping enough, refusing to exercise, and eating unhealthy foods.
Even if you’re financially stable or have reached the peak of your career, none of these wouldn’t matter if you’re not healthy.
Financial planning in your 30s
Being in your 30s means that time is still on your side. Take advantage of that longer time horizon by setting your goals straight, changing your financial habits, and of course, learning how to take care of yourself.
If you want more tips on how to grow your wealth in your 30s, or simply need financial planning or investment tips, don’t hesitate to reach out! We can connect you with experienced financial advisors who can help you achieve the financially-stable life you’ve always wanted.