Back in your school days you studied all about the Middle Ages. It was the period from the fall of the Roman Empire to the beginning of the European Renaissance, roughly from the 5th century through the 15th century AD. Well, as fascinating as that period was, it’s not the subject of today’s post. Today I’m writing about your middle ages. That’s the years when you’re in your 30’s, 40’s and 50’s. Those are the “middle” of your lifetime years when so much of what you are and will be is determined. From your career path to your relationships, family life and retirement planning, and everything in between. And so today’s post, part 1 of 3, will be about money tips for your 30’s.
Today, we know that life expectancy is longer than ever and you can think of it as divided into 3 stages. There’s stage #1, Coming of Age, which I call birth through your 20’s. Stage #3, I call the Retirement and the Golden Years of 60 and up. And today’s topic, the Middle Ages, Stage #2, ages 30-60. Each phase is different and yet somewhat similar in some ways. The key is timing in all cases, because what might be a plan in your 30’s may become a desperation move in your 50’s. Time is your friend when you are younger and not so much as you move through…the Middle Ages.
Your 30-Something Years
By the time you are 30, hopefully you have finished your higher education (although you should never stop learning!) and begun what you hope is your true career path. You have a job, you’re earning a decent salary, and you have goals and aspirations of what you’ll be doing for the foreseeable future. At least that’s what you want to have happen. This is a time in life when you have begun to be a real grownup. Most of you have begun some sort of a relationship or even chosen your life partner and maybe even begun a family. If not, it may be on your horizon in the next couple years. But there’s more to the 30’s than people relationships. Money relationships are just as significant whether you like it or not. You’re firmly out of the nest and you’re on your own financially speaking and with that responsibility comes some important decisions. Like:
1. Debt is a Big Deal
Debt is hanging around your neck as a weight if you’re like the average 30-something. For one, your student loans may still be on your list to pay off and by the time you reach this age you should have the finish line in sight. Pay off those loans as soon as possible, increasing you payments if you have to clear that slate. It’s a must and has been on your mind now for years and years.
Other debt you are now most likely managing are from credit cards, car loans, and possibly a home mortgage. It’s now time in your life to get full control of your credit and make sure you don’t overextend yourself. A mortgage is really the only long term debt that you want at this age. All others should be short term, even your auto loan. If your biggest debt is on your credit card(s), you are probably in trouble. If you are buying anything and everything you want and not prioritizing your expenses like you may have done in your 20’s, now’s the time to correct the situation. Wants versus needs, the old bugaboo is now really important and you need to get full control of it.
2. Maximize Your Savings
There was a time when saving for anything wasn’t a priority, but things have changed now. You are an adult and self-supporting and hopefully you make longer term plans and goals then you did back in your 20’s. You look at things like saving for emergencies, buying things for your home, retirement planning, family care, health care, and insurance policies. If there are kids, college savings funds are on your mind. It’s definitely time to get more serious about all of those things but it doesn’t mean you’re not Mr./Ms. Fun Times anymore. It does mean some changes in your life though. There will be limits to your dining out, drinking at the club or bar after work, buying every new style and color of the latest fashion the day it arrives in the store and endless willy-nilly treating everyone and losing control over your monies.
It’s time to start up accounts for savings if you haven’t yet and to look at alternative ways to increase your potential interest and earnings on your savings. Check out online banking, credit unions, higher interest CD’s (laddering them so they may be available when you need them without fees), and money market accounts. It’s also the perfect time to get the wheels rolling on your retirement planning. I know you’re saying WTF? I’m 30…retirement? Yes, I am saying it even though many won’t listen to this advice. But time is your best tool for building retirement savings. The ones who took advantage of it are probably sitting on the beach somewhere nice and warm with a cocktail in hand Skyping with their grandchildren! It’s the best time to start, you will never regret it. Have I said enough?
3. Your Investments – Your Future
When you’re in your 30’s, your investments can be a big part of your future. Your net worth isn’t breaking any records at this age, and maybe that’s not even your goal. But your ability to take an educated risk will probably never be better than right now. If you can, open a brokerage account (do it self-directed and with low or no fees if you can) and get some professional advice. The stock markets aren’t a sure thing, but if you look at the big picture and the long haul, it makes money as a whole if you base decisions on history, market conditions, and worlds events. Even in the modern era of the past 25 years, (1990 to 2015) the Dow Jones has averaged an increase of 8% per year despite the recession in the early 90’s and the crash of 2008. Can you find any better alternatives anywhere else today? These are the years you can afford to be most aggressive.
4. Increase Your Income
There are side hustles you read about all the time and I have written about as well. But…the best way to build your career and earnings is straight forward enough. If you are doing well at your job, talk to your boss and learn as much as you can about the opportunities for advancement. With advancement comes pay raises, respect, and potential for more responsibilities that can make you invaluable. You have youth on your side but you’re gaining experience now which is a very powerful combination. Without giving up your family and your life, there are still ways to convince your employer that you’re worth more money and responsibility. Be a team player but take the opportunity to present your ideas. Even if your ideas aren’t accepted, they still will garner you recognition and a reputation as a contributor. If you can, be supportive of others and help make those ideas work well too. Don’t be afraid to ask for a raise when you think you deserve it.
The 30-something years can be an awesome time in your life, an adventure unlike any other age for most. It’s a real building block of the person you are becoming even though there will be times when you may be unsure and even confused about what you should do to make the best decisions. The good news is that if you do make a mistake, you have time to redirect you ship and get back on course. Of course it’s better to find a smooth sailing vessel now, but it doesn’t always happen quite that way. You learn from mistakes and if you do, then your 40-somethings will be a whole lot easier. But that’s next time!
Are you a 30-something? How are you dealing with your finances and relationships at home and work that affect you every day? What advice do you have for your Millennial counterparts?