Life starts to get more complicated when we’re in our thirties. The carefree days of college are long-past. We are more focused on careers, relationships, home ownership, children, and debt management. There’s not much time in the middle of all that to start wealth building. It’s a matter of priorities. But it’s not too late to get started.
Your first instinct might be to get out of debt quickly. While many people believe that’s the first step in any wealth-building program, it’s not entirely true. Debt payoff is an important part of building wealth, but it’s not something you should prioritize over savings or investing. Wealth building is successful when you find ways for your money to earn money. Here are a few suggestions:
Cut Back on Your Spending
Create a budget and cut back on your spending. This is the most logical first step towards building wealth. Think of it as creating bandwidth for your new wealth-building plan. It takes money to make money. If you prioritize each expense as essential or non-essential, you’ll have more free cash to use for saving and investing. Those will be your focus going forward.
Commit to a Debt Payoff Plan
Once your budget for living expenses is done, it’s time to look at your outstanding debt. You’ll want to pay it off, of course, but do so sensibly. There are several techniques for this, such as the debt snowball and debt avalanche. Choose a plan that works for you and remember that it’s only one part of the wealth-building process. Don’t invest all your resources into it.
Increase Retirement Savings
This is the area where you’re most likely behind schedule. A general rule is to contribute as much to your retirement plan as your employer will match. According to Fidelity, you should have three times your annual salary put away in a retirement account by age forty. Plan accordingly. That might mean tightening the belt in other areas, but it’s worth it.
Open a Savings Account for Emergencies
One of the easiest ways to do this is to find an app that does automatic savings deposits for you. Some of these use a system called “roundups” where they round up all your credit or debit card purchases to the nearest dollar and deposit the difference into a savings account. It’s one of many “invisible” ways to put extra money aside for an emergency.
Evaluate Your Salary and Benefits Package
Income is a critical component of the wealth-building process. This is a good time to look at yours and see if it’s sufficient for you to reach your goals. If not, your thirties might be the best time in your life to change jobs. Look for a good benefits package with a 401(k) match, and of course, a substantial salary increase if you can get it.
The Bottom Line: You’re Still Young Enough to Build Wealth
They say you’re never too old to start over, but that’s not true when it comes to building wealth. In your thirties, you’re still young enough to create a solid plan and stick to it for the next few decades. As you get older, you run out of time to hit your long-term goals. Don’t put yourself in that position. Start now and you’ll be able to retire comfortably on the wealth you’ve created.