You’ve reached your 30s - congratulations! If your 20s are all about change (graduating college, starting a career, exploring new relationships, and living on your own), your 30s are about taking your life to the next level; accelerating your career, exploring the world, and making a difference.
Don’t ignore your finances in this critical decade. You have finally made a dent in your student loans, grown your paycheck, and started saving. There are six other things successful 30-year-olds do with their money to set themselves up for a more powerful future.
Grow your income. There are two primary levers to building wealth: reducing expenses and growing your income. Now that you have established years of experiences and accomplishments, build a plan to grow your income.
Women still face a wage gap relative to their male counterparts; this begins after college and persists throughout our professional careers. The average mid-forties male college graduate earns 55% more than his female counterparts.
Build your negotiation skills in preparation for asking for a raise or promotion. Here’s how to approach the conversation. Practice with a savvy friend and don’t get discouraged if you get an initial no; build a specific plan for what you need to demonstrate to secure a raise in the future. You may also want to read my experiences as a manager; the good, bad, and ugly when employees ask for a raise.
Save to spend. This sounds so easy, yet many in their 30s (and 40s and 50s...) spend first and then pay off debt. By your 30s, you should be setting aside money for future expenses, which include splurges like vacations and gifts as well as car maintenance and home repairs.
I recommend doing this automatically; set up a regular transfer from your paycheck into a “save to spend” account that you use for larger, irregular expenses. This is separate from emergency savings; a vacation to Puerto Rico in the middle of January does not qualify as an emergency!
Eliminate unnecessary expenses. You may have enjoyed an increase in salary across your 20s. If you’re like most of us, lifestyle inflation crept in; your spending increased as your paycheck grew. Enjoy the fruits of your labor, but not at a cost to your financial health.
Take the time to evaluate your expenses; you can use tools like Quicken, YNAB (You Need a Budget) and Mint to track your spending automatically. By keeping an eye out for the sneaky ways you spend more than you mean to, you can re-direct your money to align with your goals.
Invest for your future. In your 30s, you should be investing regularly. The number one regret of older Americans is not saving for retirement early enough. Set yourself up for a wealthy future by investing automatically, starting with your employer-sponsored retirement plan.
Investing is critical for women. Men are generally more confident about investing, while women are more goal-directed and trade less. Women tend to keep 10% more of their savings in cash than our male counterparts. Millennial women report a lower level of financial comfort. On average, we are less likely to feel “in control” or “confident” about our financial future. And, women generally have a smaller total invested when we retire - because we earn less.
Manage risk. In your 30s, you may have accumulated assets, started a family, and purchased a home. You likely have insurance policies in place for home, health, and automobiles.
However, most Americans do not have a will; only 35% of us aged 30-49 have one. While wills are better than nothing, they do not afford the same protections as other important legal documents. A living revocable trust can allow you to more privacy (it does not need to be filed in court like a will) and healthcare and financial directives dictate who makes decisions regarding your health and wealth should you become incapacitated.
These topics aren’t easy to address; however, consider the additional stress you’d feel if your partner or family member passed and didn’t have this documentation in place.
Give back regularly. Finally, but importantly, in your 30s you should be giving back. Many Millennials are volunteering regularly; much has been written about the importance we place on contributing to the causes we care about.
Beyond your valuable time, set up recurring donations to the causes you support most. I recommend a monthly donation that you increase with every pay raise. Fundraising is a perennial challenge for nonprofits; your regular donations will provide a needed, predictable income stream for your favorite charities.
Strengthen your financial future by taking these six steps to emulate what successful 30-year-olds do with money. If you have any other suggestions, I’d love to hear from you.
xoxo, Ms. Financier
This post also appeared on the Fairygodboss blog - I love their mission to improve the lives and workplace for women, through transparency.