Your 30s is an important phase in life where you set the pace for what might be regarded as the second half of your life before you retire from working. Many people put their retirement plan on autopilot by just going with the flow instead taking charge of their finances. Some other folks hold off planning for retirement until they are a few years away from retirement. This piece however provides three practical insights on proactive steps you can take in your 30s so that you are you not under pressure to prepare for retirement in your 40s.
- Create a budget and use it
In your 20s, you probably subscribed to the You Only Live Once philosophy in which you live for each day without much thought for the future. You’ll probably have lots of partying, shindigs, and shenanigans to recall even though the size of bank account might not match the depth of your experiences. However, you might want to consider slowing down a bit in your 30s at least on how you spend money. If you’ve not been using a budget before, you should start taking steps to become more financially disciplined.
In creating your budget, you should try to adopt the 50/30/20 rule in allocating funds for your expenses. 50% of your income should go to your needs (not wants). Needs include housing, groceries, and transportation. 30% of your earnings should to go to your wants (some of the habits picked up in your 20s). Wants include shopping, entertainment, and fine dining. 20% of your earnings should go towards savings and paying down your debt.