Creating a Financial Plan
In your 30s, you're at “a critical financial crossroads,” says Deena Katz, professor of personal financial planning at Texas Tech University and co-chairman of Evensky & Katz/Foldes Financial Wealth Management. You may be established in your career and earning a bigger paycheck, but you’re likely facing major changes, too — like buying a home or starting a family.
Here are three things you can do in your 30s to address your financial planning priorities.
1. Establish a Foundation for Homeownership
Today’s typical first-time homebuyer is 32 years old with a household income of $72,000.
If you plan to purchase a home, start building on these principles:
2. Assess Your Insurance
For the first time, women in their 30s are having more children than those in their 20s. According to preliminary 2016 data recently reported by the Centers for Disease Control and Prevention, first-time mothers are older than they were as recently as 2014. If you’re among the growing number of people becoming first-time parents in their 30s, it’s important that you provide some financial protection for your family. Research the benefits offered by your employer. If insurance coverage is limited, consider purchasing individual policies to fill the gap.
3. Expand on Your Investing
Most people should be contributing to a retirement account by now, whether it be a 401(k), IRA, or both. Factor in repayment of debt when considering how much to contribute to your retirement account. In fact, the mean retirement savings among Americans ages 32 to 37 is $31,644, but that amount more than doubles to $67,270 for those ages 38 to 43, according to the Economic Policy Institute. As your income rises, try to earmark a portion of that increase for savings and investing, and look beyond retirement accounts.
The Bottom Line
In your 30s your focus should be on establishing some financial stability and security for yourself and your family.
“Avoid the trap of always seeking a bigger house or an expanded lifestyle,” says Ken Burdick, senior product specialist at American Funds. “Instead, make responsible choices for your future.”
What's next: 3 Smart Money Moves in Your 40s
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