If you are in your 30s and above and you are interested in building a better financial future for yourself, then these tips are for you.
By now, you are probably hitting your stride in your career, you might be in a serious relationship or married, and most of all, you have a better understanding of who you are and what you truly value. This period is also a landmark time in your money life, as you build on important concepts from your 20s. You are navigating how to manage more robust cash flow, combine finances with your significant others, and spend, save and invest in line with what matters to you.
Here, Ian Bloom, a certified financial planner (CFP) and the owner of Open World Financial Life Planning, weighs in on five concepts you need to master by age 30 to continue setting yourself up for the life you’re dreaming of. Even if you are below or above 30, you can learn one or two things from these tips.
Multitask on financial goals
Say your big three goals are living a debt-free life, building an emergency fund, and saving for retirement. You should have a coordinated plan to assist you in achieving your goals. Juggling it all can feel overwhelming, so here’s a game plan: Use a financial goal-setting worksheet to calculate the amount you need to put aside each month in order to achieve your goals by a target date. Then figure out your monthly cash flow (accounting for living expenses), and tweak your estimates if need be. As you get on track, you can add to your list of goals.
Know how to mix love and money
By the time your 30th birthday rolls around, you might be settling down with a partner. You owe it to your partner to find financial harmony. Not only is money a leading cause of friction among couples, with 35 per cent citing it as a source of stress, but a new study found that spouses, who manage their finances together are more likely to report being satisfied in their relationship. The secret to making sure money disputes don’t hijack your happiness? Communication. Healthy couples are almost twice as likely as others to report having regular money conversations. “Schedule a monthly meeting where you discuss your cash flow, long-term goals, and feelings about money,” Bloom says.
Bump up your savings
As your income rises, so should your nest egg. Just make sure that your emergency fund is still on par with your lifestyle. “Once a year, review your cash flow and account for cost-of-living increases,” Bloom says. So, if you buy a home and your repayment plan is a little bit relaxed, your rainy day savings goal should go up accordingly.
Halt exuberant lifestyle
Chances are your salary has risen from when you first started working, so also is your standard of living, like renting a nicer apartment, buying a better car, etc. While there’s nothing wrong with enhancing your quality of life, as your earning power improves, “lifestyle creep” can take a toll. Before you know it, treats you used to consider luxuries start to feel like necessities – and spending can spiral out of control.
“Remember that every decision you make in your financial life has a trade-off: Each thousand of Naira you spend limits where the next can be spent,” Bloom says. “This doesn’t mean you shouldn’t have fun, but it does mean you should weigh the consequences of spending before doing so.”
To combat lifestyle creep, regularly go through a few months’ budgets. That helps you track down and cut out sources of mindless spending, such as subscription services you don’t use or the food delivery app you overuse.
Develop a keep-calm attitude
Newer investors are particularly vulnerable to missteps like panic selling, says Bloom. After all, you haven’t weathered many market ups and downs yet – to see firsthand how your funds can bounce back stronger than ever when the storm has passed. As your investments start to grow, it’s important to learn patience so you can stay the course instead of trying to beat the market.
“Fortunes aren’t built overnight,” Bloom says. “Small actions over time and sticking to a plan is the best way to build wealth.”