These days there isn’t a cookie cutter mould for someone in their 30s. You could be married and your children could be in primary school or you could be single and a homeowner. You could be a single parent, getting married, getting divorced, starting your studies again or starting a new career. The options are endless. Irrespective of what life stage you are in your 30s, you have more or less 30 years left before your retirement.
So let’s look at the 4 most important financial To Dos you need to check off before you hit your 40s.
1. Get your retirement plan on track
If you haven’t started saving towards your retirement fund, start immediately. The later you start the more pressure you will put on yourself.
According to the well-know financial expert, Suze Orman, you should not save money towards your children’s education fees if your retirement fund isn’t where it should be. It is therefore essential to get your retirement fund on track now, so you still have enough time to save for your children’s education too.
2. Become debt free
Now is a good time to pay off your credit cards, clothing accounts, overdrafts, and all other debt that is eating away at your monthly cash flow.
According to Dave Ramsey, an American financial author, the easiest way to do this is to list all your debt except your house payment, from the smallest outstanding balance to the highest. Continue paying your monthly instalment on each account, but make the smallest balance your priority. Whatever money you have extra, pay it in on that account. When it is paid off, tackle number two on the list and so on and so forth. The more accounts you pay off, the more money you will have available to put towards paying off the next account. This is called the debt snowball method.
If you want to tackle your highest interest bearing accounts first, it is called the debt avalanche method. Read more about this method here.
3. Build a full emergency fund
You have to have an emergency fund. If you haven’t started yet, do so immediately and stay committed to building it. In our previous blog post entitled Don’t fool yourself everybody needs an emergency fund, we share some tips on how to get started.
Ramsey says that an emergency fund containing 3 – 6 months’ expenses, will not only safeguard you from life’s financial surprises but it will also protect you from getting into debt.
He advises to keep your emergency fund separate from your normal account, and to make sure that you can have access to the cash immediately.
4. Learn to live within your means
Stacy Rapacon, a reporter with Kiplinger’s Personal Finance magazine, writes in her article 10 Financial Commandments for Your 30s that you need to accept what your profession pays, and spend according to what you can afford. By comparing yourself with your friends or family who have higher paying jobs, and trying to keep up with their spending is a recipe for rocking up mountains of debt very fast.
This is a life lesson everybody should learn as early as possibly in life. If you can live within your means and make the most of what you earn by sticking to a budget and saving wisely, you will be able to afford the important things in life.
If you are in your 30s and your monthly debt installments are so overwhelming that you cannot even think of starting to check off these four elements, contact Debt Rescue today. Our debt counselors will help you make the most of what you earn so that you can start reaching your financial goals.