By the time you turn 30, you should have outgrown the irresponsible money habits you were able to get away with in your 20s.
Now, it’s time to develop some grown-up goals that will set you up for a successful financial future for years to come.
Below, Business Insider rounded up seven money goals every 30-something should aim to complete before they hit the big 4-0.
Grow your income as much as possible
By your 30s, you have a good idea of what you want to do and where your career is going. Now it’s time to leverage those skills and boost your cash flow as much as you can. Your 30s are a good time to play around with side hustles and setting up passive streams of income that you can mine for years to come.
“Your peak earning years don’t happen until your 40s or 50s, but your 30s are a time to build momentum on your income and propel you to your peak income,” Pamela Capalad, CFP and founder of Brunch and Budget, told Business Insider. “Ask for promotions and raises, figure out what skills you have that are unique and if employers should be paying you more for those skills.”
Figure out how much insurance you need — and get it
Whether it’s a spouse or kids, more people become reliant on you as you get older. In your 30s, it’s important to take stock of the kinds of insurance that best suits your needs and lifestyle and sign up for appropriate coverage.
For your life insurance needs, Sophia Bera, CFP and founder of Gen Y Planning, recommends getting a term life insurance policy that’s seven to 10 times your salary — enough to be able to cover your income, pay off a mortgage, and take care of your kids if anything were to happen to you.
Don’t forget to reevaluate your insurance plans each year (or go over them with your spouse if you’re married) and ensure that your coverage is still working for your needs and budget.
Pay off your debt
Now that you’re making more money than you were straight out of college, get increasingly aggressive about paying off your student loans, credit cards, and any other outstanding debts.
With student loans, you have even more options. “If you’ve got student loans, see if there’s a way you can pay them off early, if you can get reductions based on your income or the type of job you have, or if you can refinance them at a lower rate,” Pam Horack, CFP and “Your Financial Mum” at Pathfinder Planning LLC, told Business Insider.
Decide whether or not you want to buy a house — and take steps to buy one if you do
Again, once you reach your 30s, you have a pretty good idea of your career trajectory and long-term goals. Is owning a home a part of that?
If the answer is yes, take steps to make it happen. Start by saving up for a 20% down payment, but honestly, the more you have the better. You should also get your credit in order, as it affects how favourable of an interest rate you’ll get when you apply for a mortgage.
Some experts also suggest applying for a pre-qualification letter from a mortgage lender, which demonstrates to you, your realtor, and to sellers how much you can afford. When considering multiple offers, sellers will likely make an offer to those with a pre-qualification letter before those without one.
Save for retirement
If you do nothing else, start saving for retirement — as in, right this minute. Thanks to compound interest, if you use an account like an IRA or 401(k), the earlier you start, the farther your money will go. Experts recommend contributing at least 10% to 15% of your income to a retirement account, and by your 30s you should be hitting that goal or coming close to it.
“If your company has a 401(k), put the most you possibly can in there,” Horack advises. If you max out your retirement accounts before you even see the money, you won’t even miss the cash you never had, she adds.
Invest in something other than your retirement savings plan
Capalad notes that relying entirely on one retirement account can be detrimental if another financial crisis hits, so it’s a good idea to diversify your streams of income.
If you’re maxing out your 401(k) plan, consider contributing money to a Roth IRA or traditional IRA, research low-cost index funds — which Warren Buffett recommends — and look into the online-investment platforms known as “robo-advisers.”
Of course, you’ll want to make sure that your general finances are in order before you invest. But if you have a sound emergency fund, have prepared for future expenses, and are debt-free, then the quicker you put your money to work and jump start its growth, the better.
Build up a savings cushion
By 30, you hopefully already have an emergency fund on the books, stocked with three to six months worth of living expenses. From there, start building up a savings cushion — money that’s not earmarked for a specific purpose but grants you the freedom to dive headfirst into new ventures without worry.
“I don’t like the term ’emergency fund’ because it breeds emergencies,” Capalad says. “This money is for big transitions, whether you want to start a business, move across the country, or start a family, not just if your car breaks down.”
By your 30s, you should know if you can say yes or no to something without it having a major impact on you financially.
Kathleen Elkins contributed reporting.