Over Age 30? 12 Financial Rules You Should Follow

Updated 02/02/18

When it comes to your finances, do you take a head-on or head-in-the-sand approach? If you identify with the latter, the good news is you’re not alone. The bad news? You’re not alone. New data suggests that when it comes to managing money, women are not as independent as you’d expect. In fact, 91% of women in heterosexual couples are not participating in financial decisions. But we want to change that statistic. To help you become a master of your own finances, we’re debuting a new series called The Paper Files, where we uncover tricks and tips that will help you manage your money and your future. Ready to take it head-on?

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Have you started saving for your retirement yet? If you’re turning your head in a firm “no” movement, don’t stress—you’re not alone. Most families, even those approaching retirement, have little or no retirement savings. The median retirement savings of families between 32 and 37 is $31,644. But if you want to retire by age 67, then you should have 10 times your final salary in savings.

Hearing that figure sounds the alarm for many of us because let's face it: By age 30, most of us haven’t even thought about retirement. It’s easy to let your financial health slip, but this is the age when you really need to work on your financial fitness, especially if you want to set yourself up for a well-funded retirement and meet your personal, professional and shared family goals.

But where does one begin? How do you curb a spending habit and start saving? We know how tough it can be leaving your frivolous 20s for your serious 30s, so we compiled 12 financial rules to follow (oh, and it’s time to toss some things).

Save for retirement

Early in your career, you may not have been making enough to save, but if you’ve gotten a few salary bumps at this point, you have no excuse not to prepare for retirement. New data suggests that only 4% of all 25-year-olds will have enough saved for retirement by the age of 65. That’s quite a scary statistic, but how do you know if you fall into this boat? A good benchmark is to have one year’s salary saved in your retirement account by age 30, but if you want to get more granular, finance expert David Weliver of Money Under 30 recommends the following:

If you make…

  • $50,000, you should have $15,000 saved.
  • $75,000, you should have $37,500 saved.
  • $100,000, you should have $90,000 saved.
  • $150,000, you should have $225,000 saved.
  • $200,000, you should have $360,000 saved.

Financial consultant Garvin Walsh advises, “You need to be putting 10% to 15% of your gross pay away throughout your career in order to have enough money to retire on.”

Be Prepared for Emergencies

In addition to retirement, by age 30, you should also have a savings fund for emergencies, such as getting sick or losing your job. Financial advisers generally recommend you save have six to 12 months of living expenses saved in an emergency fund. This should cover your rent, car payments, utility and phone bills, and any other necessary living expenses, assuming you’ll have no other income coming in.

Anticipate Your Expenses

While you should have a backup fund for unexpected events such as losing your job, at this point you should also be looking forward and thinking about what expenses you can expect. If you’re a homeowner of a midcentury or turn-of-the-century house, your roof may need to be repaired in a few years, or perhaps that washer/dryer set of yours is on its last legs. Don’t let these things come as a surprise—they shouldn’t be. You should also have a “large purchase reserve” in your savings to cover these anticipated costs.

Avoid Debt

No matter how much you earn, living within your means should be your top consideration when you’re budgeting and spending. Don’t sign a lease on an apartment you can’t afford: 30% of your annual income is widely considered to be an affordable amount to spend on rent, which leaves enough for your other expenses. Avoid making credit card charges you can’t pay off within the month, unless they’re important big-ticket investments, such as a new refrigerator that will last you 15 years, etc.

Don't Spend Frivolously

While you may be able to purchase that handbag you dream of, or perhaps you can get a loan on a house that’s out of your price range, that doesn’t mean it’s a wise financial decision. Create a budget for yourself, and know how much you’re allotted to spend within each category. And moreover, make sure your budget is realistic and thorough, and make spending decisions accordingly. As Walsh put it, “If you have a beer budget, don’t drink champagne.”

Pay off your debt

Whether you have student loans, credit card debt, or personal or business loans, it should be a top priority of yours to pay off your debt so you don’t bog yourself down in interest and other fees and so you can start putting your hard-earned dollars toward your retirement and personal and professional goals (buying a house, starting a business, etc.).

Become financially literate

At this age, it’s important to fall in love with your finances and learn everything you can about both your financial opportunities and your responsibilities. Start reading personal finance books, consult with a financial adviser, and hire an accountant. Learn everything you can, and don’t invest in anything you don’t understand.

Protect your assets

Health insurance may be a no-brainer to you, but make sure your other important assets are insured as well. Catastrophe can strike at any time. If you rent, get renter’s insurance. If you’re a homeowner, get property insurance, flood insurance, and the like. Think about the things you own. How much would it cost to replace them? As you earn more, you start to accumulate more valuable things. Chances are it’s not so easy to replace them.

Manage your credit score

A strong credit score is one of the most important things for your financial health. Not only can your score impact your ability to get a mortgage, a business loan, or a car loan, but it also can impact your ability to rent an apartment, get a good rate on auto insurance, and even get a job. Even if missed payments or charge-offs are a part of your past, time will heal all wounds. To improve your credit score, make sure you’re paying off your debt monthly and not carrying large balances relative to your credit line.

Wise up about your credit card

Those credit card offers that arrive in the mail may be tempting, but chances are they’re not the best deal you can get. For some of us, getting a low-interest rate and no annual fee, regardless of anything else, is really the best thing we can do for our finances. For others, travel perks and other rewards do have strong benefits. Do your research, shop around, and choose the card that’s best for you—not just the first one that gives you an offer.

Consider the cost of children

Whether you’re planning to have children in the next decade or you just have an inkling of a feeling you may want to have them, now’s the time to ready for the costs that come with having children. You’ve surely heard that diapers add up, but don’t forget that tuition costs are rising at the speed of lightning, and that’s just the beginning.

Provide for Your Family

If you have dependents or friends and family who rely on you, however uncomfortable it may be, it’s important to think about how you can support them after you’re gone. Write a will, sign up for life insurance, and start estate planning. The only thing you can count on is that life is full of surprises.

What are the biggest financial lessons you’ve had to learn in your 30s?

This post was originally published on February 29, 2016, and has since been updated.

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