Your 30s are critical in setting the stage for long-term financial health. The investing and saving habits you started in your 20s have (hopefully) become ingrained and you are well positioned to reach critical milestones before your prime earning years and your eventual retirement.
Unfortunately, many Americans are not saving enough to set themselves up for long-term prosperity. According to the Bureau of Economic Analysis, personal savings rates were just 3.4%in September 2023.
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These 5 magical money moves will propel you up America’s net worth ladder in 2024 — and you can complete each step in minutes. see how
If you’re in your 30s, what steps should you take to ensure you’re financially prepared for your golden years? And if you’re older, how can you catch up?
The good news is that it is almost never too late. There’s still time to position your portfolio for success, whether you’re in your 30s or 50s. Let’s explore.
Create an emergency fund
An emergency fund is a financial safety net used to cover unexpected expenses, such as medical emergencies, car repairs, or job loss.
According to a survey commissioned by LendingTree, 58% of Americans do not have an emergency fund, 49% would not be able to cover a $1,000 emergency with cash, and 40% would have to resort to covering an unexpected expense with a credit card.
By saving three to six months of living expenses, you can avoid debt when unforeseen circumstances arise. Start by setting a realistic scenario savings goaland automate your savings by setting up a direct deposit of your paycheck into a high yield savings account. Aim to save at least 10-15% of your income until you reach your goal.
Paying off high-interest debts
The Federal Reserve reports that starting in May 2024, the average credit card interest rate it was around 21.5%, making it one of the most expensive types of debt. High-interest debt can accumulate quickly, making it difficult to pay off the principal and compromising your credit score.
If you have multiple credit accounts, focus on paying off your highest-interest debts first. This is known as the avalanche method, which involves making minimum payments on all debts except the one with the highest interest rate, which you pay off aggressively. Once the debt is paid off, direct your efforts toward the one with the next highest interest rate.
Another option is the snowball method, which focuses on paying off your smallest debts first. The idea is that by achieving these initial victories, you gain the motivation you need to continue.
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Start or Maximize Retirement Contributions
An April 2024 AARP survey found that one in five Americans ages 50 and older has nothing saved for retirement. Don’t be caught off guard: The sooner you start saving for retirement, the more compound interest will kick in, allowing your investments to grow exponentially.
Combat this tendency by taking advantage of your employer’s 401(k) match and contributing at least enough to get the full match. Then work to contribute to retirement accounts and consider increasing contributions whenever you receive a raise or bonus.
Consider buying your own home
Owning a home is a generator of wealth for many. The National Association of Realtors reported in June the average price of a house in 2024 it was $419,300, with home value representing a substantial portion of many Americans’ net worth.
When buying a home, save at least a 20% down payment to avoid private mortgage insurance (PMI) and lock in a better mortgage rate. Improve your credit score to qualify for lower interest rates, and consider first-time homebuyer programs and grants that can help with your down payment and closing costs.
Diversify your investments
Spreading your risk across different investment types – stocks, mutual funds or real estate – can improve your long-term performance and protect against declines in any single market. Regularly review your portfolio to maintain your desired asset allocation and consider low-cost index mutual funds or exchange-traded funds (ETFs) to diversify across sectors. A financial advisor can help you develop a personalized investment strategy.
Keep track of missed milestones
Are your 30s in the rearview mirror? It’s not too late to catch up. Start by creating a detailed budget to identify areas where you can cut back and reallocate funds toward savings and debt repayment. A second job or side hustle can provide some extra income to help get you back on track.
Additionally, consider making catch-up contributions to retirement accounts. Individuals over age 50 can contribute an additional $7,500 to their 401(k) and an additional $1,000 to their IRA in 2024.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
