I’ve covered personal finance goals for your twenties over and over (like a broken record). Despite the name of this site, I’ve discovered that there is a contingency of all age groups who frequent and contribute to the site. And now, I’m in my thirties. So we’re going to hit a different group on this post. However, it should still be highly relevant to those in their twenties looking ahead towards future financial goals.
So what are some realistic and strategic goals once you reach 30? I’ve been thinking about this a lot lately. The thirties are an interesting time period. Ideally, you start to advance in your career and begin hitting your peak earning years, you may have a house, start a family, and you generally have a completely different set of financial goals than when you do in your twenties.
Much like I did on my twenties post, I’ll cover some basic goals along with goals that would win you extra points. Remember, these are goals to strive for, they won’t be hit by everyone.
1. Retirement: Max Out your 401K
I’ve max out my 401K for the last few years and plan on doing it every year in my thirties. Why max it out? Well, for starters, if you’ve been doing it already, you know what it takes and should have no problem doing it as your income continues to grow. If you haven’t been, your thirties might begin to provide enough of an income for you to consider it. Don’t wait until your 40’s to start savings significantly for retirement. By then, it might be too late to use the power of compounding capital gains to have a huge impact by retirement.
Not sure what the IRS maximum 401K contribution is? Click that link to find out.
- Bonus Points: Starting to contribute to your IRA in your twenties should be a goal. In your thirties, there’s more at stake. In addition to maxing out your 401K, also try to hit your IRA maximum contributions by maxing out your traditional or Roth IRA.
2. Debt: Pay Off All Non-Mortgage Debt
This would include credit cards, auto, and other high-interest unsecured loans as well as student debt. High-interest loans are the equivalent of a dam that’s about to break. It’s starts off as a little drip and as time goes by it turns into a steady stream and finally, it breaks down the wall altogether.
- Bonus Points: Pay off your mortgage. Carrying significant mortgage debt into your forties and fifties leads to you being very dependent on your primary source of income to keep the house, most notably, your day-job. As we all know, hardship can happen anytime. Having to foreclose on a house at that stage of life makes recovery for a comfortable retirement very difficult.
3. Emergency Savings: Maintain an Emergency Fund Equal to One Year’s Worth of Living Expenses
In a span of ten years, the country will probably going to go through an economic recession or two. In such times (and even outside of them), you or your significant other may be at risk of losing your job. You also may become more prone to disease or other medical hardship as you age. When my wife was laid off last year, our emergency savings fund helped save the day. Protecting your future goes a long ways towards peace of mind.
A lot of financial gurus recommend six months worth of emergency savings, but after this recession, I’d feel a lot more comfortable with a year.
- Bonus Points: Earn interest on your emergency fund through a high-yield free checking account online.
4. Protect: Protect your Loved Ones with Term-Life Insurance
A lot of us will continue or begin long-term relationships and possibly start families in our thirties. If someone you know is even partially dependent upon your income to live comfortably, then you should be taking a look at covering yourself with a term life insurance policy. Term life insurance is the ‘discount broker’ of life insurance – you cut down on fees and pay for only what you need.
- Bonus Points: Acquire long-term disability insurance as well.
5. Protect your Legacy: Fulfill your Legal Obligations to Others
Create and maintain a living will, living trust, durable power of attorney, and a will. If you are to become medically incapacitated or pass away, these legal documents can protect your loved ones on a financial and emotional level. You owe it to them.
You can go through an attorney to complete these legal documents, but that can be costly, particularly if you frequently update them. I’d recommend checking out Quicken’s WillMaker Plus, which has fill-in-the blank templates for all four documents and many other legal documents that you might find useful.
- Bonus Points: Don’t die in your thirties. Oh, that’s just wrong, isn’t it? Have a little sense of humor!
Personal Finance Goals for your Thirties Discussion:
- What goals did you create/complete while in your thirties?
- If you’re in your twenties are you a step ahead on completing some of these goals?
- What financial goals do you have for your thirties?