Financial Literacy in Your 30s: Smart Money Moves for Now

Welcome to a guide crafted specifically for those navigating the exciting yet challenging terrain of their 30s. Claire Hollander, a Wealth Advisor at Liberty Group, takes you through a comprehensive journey aimed at improving your financial literacy during this critical decade of your life. Whether you’re contemplating homeownership, tackling debt, seeking the ideal career, or laying the groundwork for retirement, this video serves as your roadmap to making more informed and smarter financial decisions.

Understanding and Assessing Your Financial Health 

Before you can successfully navigate the financial landscape of your 30s, you need a clear picture of where you stand today. Grasping the full scope of your financial health is similar to a medical check-up—it’s essential to diagnose where you are now to plan for a healthier future. As an advisor, I can’t stress this enough. It’s the foundation for all your financial decisions in your 30s. 

Conduct a Personal Financial Audit 

Let’s start by conducting a thorough personal financial audit. Gather all your financial documents—bank statements, investment accounts, bills, loan statements— anything relevant. Then, list your assets and liabilities. Next, analyze your income and expenses. 

Identify areas where you can reduce spending and increase savings. Ask yourself, how are your financial goals aligned with your current habits? Are you putting enough away for retirement, a down payment on a home, or your child’s education? This reality check will set the stage for informed decision-making and is one of the most practical money management tips for anyone in their 30s. 

This detailed analysis gives you invaluable insights into your financial status, identifies areas that need attention, and lays the groundwork for informed decisions. 

Your Credit Score Is Important 

Your credit score affects your ability to borrow money, secure housing and loans, and sometimes even land a job. In your 30s, a strong credit score is a gateway to achieving major milestones. For a good or excellent credit score, ensure you pay bills on time, maintain low or no credit card balances, and limit the number of new credit inquiries. 

If you find your score isn’t where it needs to be, set up a plan to improve it by paying down existing debt and using credit responsibly. 

You Need an Emergency Fund 

Life is unpredictable—no matter your age. That’s where an emergency fund comes into play. This safety net is crucial for covering sudden expenses like medical bills, car repairs, or job loss. But how much should you save? A general rule of thumb is to have three to six months’ worth of living expenses tucked away. Start small if you have to and automate your savings to continue building this fund. 

Budgeting and Expense Tracking 

Now, let’s delve into budgeting. In your 30s, it’s more than just balancing the books; it’s about crafting a budget that aligns with your evolving priorities and aspirations. We recommend outlining your income, fixed expenses, and variable expenses. This flexibility allows you to accommodate life changes, ensuring your budget stays in sync with your current situation. 

Identifying and Cutting Unnecessary Expenses

Trimming the financial fat is a key step in refining your budget. Scrutinize your spending to find areas where you can cut back without compromising your quality of life. Do you have subscriptions or memberships you rarely use? Are you paying for conveniences that you can do without? Small adjustments can add up to significant savings. By identifying and eliminating these unnecessary expenses, you can free up funds to bolster your savings or pay down debt faster.  

Debt Management and Elimination

Entering your 30s often means facing a stark reality—the weight of debt accumulated in earlier years and the prospect of long-term debt in the form of a 15- or 30-year mortgage. Whether it’s lingering student loans, burgeoning credit card balances, or significant commitments like a mortgage, managing and eliminating debt is a cornerstone of financial literacy at this stage of life. 

For many, student loans are a rite of passage into adulthood, but they don’t have to be a lifelong burden. Start by evaluating your loan terms, interest rates, and repayment options. You may have income-driven repayment options, loan forgiveness, or refinancing options available to you. Aim to pay more than the minimum each month to reduce the principal balance more quickly. 

Credit card debt is a slippery slope due to high-interest rates and minimum payments that barely chip away at the principal. To outsmart this debt, start by stopping the use of cards for new purchases. Next, employ the debt avalanche or snowball method—the former focuses on paying down debts with the highest interest rates first, while the latter tackles the smallest debts for quicker wins.  

Lastly, larger loans like those for a home or car often come with more favorable interest rates but are long-term commitments that can impact your financial flexibility. Ensure your mortgage payment, including taxes and insurance, doesn’t exceed 28% of your monthly gross income. Always shop around for the best rates before committing and consider the total cost of the loan, not just the monthly payment.