So, your thirties are here and you’ve nailed this whole managing your finances thing! Where do you go from here? Your thirties are about consolidating your finances and making your money work harder for you. You’ll probably have a family during this decade, and you’ll either be taking your first step on the property ladder or moving up it. There are a few things you can do to get yourself ready!
The first thing to do is pay off non-mortgage debt – credit cards, student loans, car loans. Long-term loans and credit cards can be just as (if not more) damaging to your financial stability and credit score than running into late payments with payday loan lenders so get your foundation set up correctly before you start looking into what capital you have to invest with.
Think about how much money you save each month by no longer paying these debts, and save all or some of it for big-ticket items. Say you’re saving £200 a month because you’ve cleared your credit card. Don’t fritter this £200 and end up using your card again to buy a fancy holiday – save up that £200 every month and pay for your break outright.
Your thirties is the time when you think seriously about retirement. Your career is probably settled now, and hopefully you were squirreling away a few quid every month during your twenties. Now you need to think about how much more you can stash each month and how you can achieve your magical retirement figure. There are lots of calculators that can help you to do the maths.
Work out when you want to retire and how much dosh you want to have by that time. When you’re in your thirties you still have a lot of time – don’t leave it until your forties.
One common mistake is to set aside money for your children’s college expenses. Think about it – if the worst comes to the worst, they can get a loan. There are no loans for retirement!
Look at your investments, and make sure they’re diversified. You need to put your eggs in all sorts of baskets so that you’re buffered from the effects of one basket crashing to the floor.
You need to have between 50 and 55 per cent of your portfolio in big companies, 20 to 25 per cent in smaller companies and the remainder in foreign companies. Make an even split between growth and existing value. Have a look at Kiplinger’s Fund Finder to seek out funds that suit you.
Invest in yourself – don’t stop learning. Go on as many training and personal development courses as you can, as it can lead to pay rises or better jobs.
Make sure that your existing assets are protected – homeowner’s insurance, disability insurance and life cover. You should also by now have a big emergency fund – enough to cover a year’s expenses, so you don’t have to use Wonga.com.
Get a will and make sure people know about it. This becomes especially important when you have children, as you need to nominate guardians. You really need life insurance – get a policy that will at least pay off the mortgage if something happens to you. Shop around, as life insurance can be surprisingly cheap.