The top 5 things to do with your money in your 30s.

The top 5 things to do with your money in your 30s.

It’s easy to get carried away thinking that you need to have everything financially squared away and to have achieved all your goals by the time you are thirty. It’s great if you have, but for most people, success is more about gradual improvement and growth.

These are our top 5 recommendations for what to do with your money in your 30s.

1. Don’t forget the financial basics and good habits.

Life can look very different in your thirties when compared to your twenties. You may be married, have children, have bought a house and settled into a career (we’ll discuss whether or not it’s the right career later…) and it’s easy to get carried away and forget the basics. In our previous article on managing money in your 20s, we set out some prudent financial rules to live by. These were:

• Set and stick to a percentage-based budget that easily fits around any changes you have in income.

• Invest early and take advantage of compound interest to take the easiest path to building wealth.

• Pay off your debts and stay out of debt as far as possible to increase the amount you can save for your future.

As life becomes more settled, it’s easy to get into a rhythm - just make sure it’s a good one. It’s quite possible to be really sensible with money in your twenties and for things to go awry as you progress into your thirties. Anything could set you off-course, from squandering an inheritance from a Grandparent to finding that partner that only wants to live for today, or even something deeper like not feeling happy with the course your life is running and borrowing money to buy things that make you feel better.

The good news is that every bit of income you receive is a new opportunity to take stock of your budget and start again. A percentage-based budget is a really useful way of finding a balance between spending and saving.

2. Set your financial targets.

By the time you hit your thirties, you will have a better appreciation for how much things cost and how much you need to maintain your standard of living. If you’ve been prudent, you will already know this from your budget, but there’s no time like your thirties to start putting some figures against your long-term financial goals. In a recent article, we looked at how much money you will need to retire with and found a figure of at least £20,000 each year is going to be sufficient for many. However, to generate this much income each year and not eat into the capital, you will need in the region of £500k set aside in investments.

With this in mind, you can take stock of your current financial situation and compare what you have now to what you need in the future and make a plan for how you can reach that goal. You can use our Pension Pot Calculator to do the sums for you. Another useful tool is a compound interest calculator, which does something similar.

3. Don’t succumb to the pressure of needing to look successful.

Also known as Keeping up with the Joneses, it’s easy to fall into the trap of comparing your life with that of your peers. The important thing to remember is that everybody starts from a different base. You may have had really supportive parents that help guide you into a career and covered the cost of university or perhaps you married a partner that has a high income, or comes from a wealthy family or you could be in the total opposite of all of these. The truth is, it’s impossible to compare your life against other people’s and it’s a dangerous road when you start trying to count other people’s money.

It seems simple, but for the most part, people generally earn an average salary and it’s only the people that own their businesses, are top salespeople or are at the top of their game in a specialist field that tend to earn more. You can read this recent article on the highest-paid careers for more information. Furthermore, it stands to reason that if there are two high-earners in a household, they are also going to have the capacity for a higher standard of living.

What’s also important to recognise is that a lot of the things that look like success can be financed with borrowed money and you have no way of telling from the outside. They could be lying awake at night, concerned by their excruciating debt repayments and have nothing but a wing and a prayer in their pension.

What does the high standard of living look like that causes so much envy?

It’s the usual suspects that seem to bring out feelings of inadequacy when we compare lifestyles. From expensive cars and big houses to frequent holidays and high fashion, you can bet your last pound that someone out there is always going to have something better than you have. It doesn’t matter where you came from or who you are now, you cannot win this game. You may have the biggest yacht on the Solent, but take it to Monaco and it will look like a toy. Even the billionaires are competing for who can get the furthest into space, so it’s best just not to get involved.

Whatever your vice is, just account for it in the luxury part of your budget and as your income grows, so does the amount you can spend on it, without sacrificing your long-term financial goals. Try to remember though that money can’t buy a loving, happy and healthy family, so start there and anything else is just a bonus.

4. Continue to build your career or start a side-hustle.

Being in your thirties is a great time to reflect on your career. We change a lot by the time we are in our thirties and we have the benefit of life experience and perspective. It may be the case that the field of work you chose in your early twenties is nothing like you imagined it, so now is the time to think about trying something new or retraining. Alternatively, if you have been at the same company for a long time, it’s easy to be overlooked or taken for granted, so now could be the time to consider moving to a different company where you can be judged on who you are now, without any preconceptions.

Perhaps you have decided that the employee life just isn’t for you, but with the benefit of experience and contacts, you could start to branch off on your own. This could be in the form of a life-changing side hustle or even starting your own business. The benefit of starting something on the side is that you can work at it quietly whilst continuing to have your normal income - you can test the water, see if the demand is there and fine-tune your business model. Once the figures start to even up, you can take the leap and quit your day job. There’s nothing like the freedom of working for yourself, but there’s also nothing like the stress of having to find work and making sure you get paid. Self-employment isn’t for everyone, so it’s important to try it out first, before you burn your bridges!

5. Start planning for the worst.

When you are in your twenties, it often seems like life will go on forever. Unfortunately though, by the time you are in your thirties, many will have lost friends and family, driving home the importance of planning for the worst. You will need to consider how the ones you support financially will continue to be looked after, how your wealth will be passed on to the ones you love and what your final requests are.

The most basic way to plan for the end is to make sure you have a will that’s current, legal and binding. From an income perspective, you may wish to consider term life insurance that will protect your family when you are gone.

We recently wrote an article on building a legacy folder with full details of how you can make life that little bit easier for those you leave behind.

Conclusion.

Life starts to take on a more steady rhythm in your thirties but it’s easy to get distracted and focus on the now, rather than your future. As ever, it’s a question of balance between spending and saving, setting some clear goals and planning for the worst. Essentially, it’s time to grow up when you are in your thirties, build an enjoyable career and set yourself up for a successful future.

What’s next?

If you need advice on pensions or how you can invest for the future, you can get in touch with one of our advisors for independent financial advice. We offer a free initial consultation and although we are based in Tunbridge Wells, we advise clients across the UK.

Don’t forget, this article offers information about financial planning and investing and should not be taken as personal advice. Remember that investments can go up and down in value, so you could get back less than you put in.