Are you in your thirties and contemplating your financial future? This decision is commendable, as life in your thirties becomes more serious, with larger housing considerations, potential home purchases, and increased financial impact from impulsive spending due to higher costs.
Prioritizing stability through financial goals is crucial to ward off future financial concerns. Here are six smart financial goals to establish in your 30s:
01. Strive for annual income growth
While money may not directly buy happiness, it undeniably makes life more manageable. Set a goal to enhance your income, steering away from situations where you enjoy camaraderie with colleagues but face poorly structured (secondary) employment conditions.
Increase your income by negotiating a raise, exploring new job opportunities, or initiating a side hustle. A growing income provides the flexibility needed to accomplish your financial goals.
02. Refrain from borrowing money
The temptation to resort to various loans, be it credit card debt or personal loans, can be strong. Resist this urge. If you can’t afford something, reconsider your desire, as taking out a loan isn’t a viable solution.
Instead of financing a car through a loan, seek alternatives within your budget. The only exception to this rule is a mortgage, as other loans can hinder your financial well-being, making it essential to avoid them.
03. Adhere to the 20% guideline
Follow this straightforward rule: set aside 20% of your income for savings, encompassing emergency funds, retirement, and investments. While it may initially appear to be a substantial amount, it proves to be a practical approach to securing your future without sacrificing too much in the present.
Given the prevailing high costs, achieving a 20% savings goal may seem challenging. Explore alternative avenues to cut costs, such as switching energy providers or reevaluating insurance coverage to avoid overpaying.
04. Avoid succumbing to lifestyle inflation
As your income increases, the temptation to elevate your lifestyle becomes enticing. Upgrading to a newer car, a larger house, or dining out more frequently can quickly accumulate. Resist these urges and strive to maintain a frugal lifestyle to save more effectively. Establishing budgets and allocating funds wisely can be instrumental in this endeavor.
05. Initiate your investment journey
Investing may seem daunting, but it presents an effective means of making your money work for you. Start with uncomplicated stock investments, such as Exchange-Traded Funds (ETFs). Learn the ropes of investing—begin cautiously and avoid imprudent decisions—to witness the growth of your wealth over time.
While investing carries the risk of potential losses, strategic investment choices can mitigate these risks.
06. Cultivate your pension fund
Although retirement may seem distant, planning for your pension is essential. Without the assurance of a robust pension from your employer, it’s wise to proactively build your pension fund. By contributing now, you can alleviate future financial goals.
Determine the annual contribution limits set by the Tax Authorities, and if you opt for a pension plan, enjoy tax advantages compared to leaving the money in a personal account.
6 Smart financial goals to set during your thirties conclusion
Entering your thirties can feel like a reality check, where the familiar freedoms of the past no longer suffice. Increased financial obligations and diminished flexibility become apparent. However, a set of straightforward financial goals like mentioned above can provide the guidance and assurance needed to confront significant challenges.