Key Points:

• By the time you reach your thirties, if not done so already, it is critical to start securing a solid footing with your financial plan.

• In addition to increasing your savings, it is also important to establish a basic estate plan to ensure that your well-being and assets are managed properly if something unexpected should happen to you.

• In addition to estate documentation, you should also strongly consider securing life and disability insurance if not already in place.

1. Increase Savings and Pay Down Debt

As professional opportunities and earning power begin to increase, many individuals in their thirties may also be thinking about balancing the demands of a young family and possibly even aging parents. With several high priority items competing for time and attention, individuals or couples in their thirties need to ensure their current financial situation is secure while also creating habits that can lead them towards a successful future retirement.While everyone’s financial picture cannot fit under a “one size fits all” mentality, provided below are some important steps that should be taken as you start to take on more responsibility in your life.

Utilize Employer Sponsored Benefit Plans

By now, hopefully you have been taking full advantage of employer sponsored benefit plans and other tax advantaged savings vehicles (e.g., 401(k) plans, Health Savings Accounts (HSAs), etc.). These savings vehicles can go a long way towards ensuring a successful retirement. In addition, if your employer provides a “match” for your contribution, not participating means leaving money on the table. As promotions and raises come into the picture, try to avoid ”lifestyle drift”, a situation where your regular spending goes up. Instead, consider allocating a portion of those pay increases towards further savings.

Consider More Savings Accounts

There are also other ways to save that can provide added security. Be sure you are balancing competing savings demands by also considering a Roth IRA account for additional retirement saving, or a 529 education savings plan if you have children. But not all your savings needs to be for retirement and education. Having additional investments outside of retirement accounts for unexpected cash needs (a good rule of thumb is six months of living expenses) can also supplement your savings.

Saving vs Paying Debt: What Should I Prioritize?

There are many ways to save “extra” cash. However, we also find that many people struggle with the conflict of saving versus paying down debt. There are always going to be individual circumstances to consider, but coming up with a plan and sticking with it is usually an important first step. Of course, if you have high interest rate credit cards, these are important to pay off as soon as possible. With the staggering levels of student debt, however, this can also be an issue. Maintaining payments, while also saving early for the future (to the extent you can), will help avoid harm to your credit and allow you to benefit from the compounding of your savings.

2. Establish a Basic Estate Plan

According to a recent survey, 57% of US adults have no estate planning documents in place.¹ In order to avoid being a part of that statistic, it may be time to consult with an attorney. Estate documents can help to ensure that your well-being and assets are managed the way you direct and by whom you direct when you are unable to do so. For those with children, these documents also name a guardian for your minor children (usually under the age of 18) if something unexpected should happen to you. Talk with your attorney about trust planning as well, but at a minimum, consider executing a Will and Power of Attorney documentation to cover both your assets and your health care directions.

3. Consider Risk Management

Life & Disability Insurance

In addition to estate documentation, you should also strongly consider securing life and disability insurance if not in place already. Both coverages can be invaluable if something unforeseen should happen and can be available at a reasonable cost. Before reaching out to an insurance agent, speak with your employer, as many companies offer competitive life insurance or disability plans as part of their benefit package.

With respect to life insurance, there are many different types of coverage out there, and it can be overwhelming. While different types of “whole life” policies can be used for additional investment or savings, often a basic “term” policy can be the most cost-effective form of coverage.

Is Adding These Insurance Plans Worth It?

Although your assets are growing at this stage, your overall financial “balance sheet” is most likely still in a vulnerable position at this stage in life. The security of added insurance will ensure you and your family are protected.

Reach Financial Stability in Your 30s by Saving & Spending Wisely

A healthy and stable financial balance sheet isn’t created overnight, but rather is built with steady, gradual accumulations of wealth across several savings vehicles. By establishing simplified, repeatable savings habits early on and preparing for life’s unforeseen risks, individuals in their thirties will be well on their way to future financial success. See the ways a financial advisor can help.

Sources:¹ 2019 Survey Finds That Most People Believe Having a Will Is Important, but Less Than Half Have One