For many people, our 30s are a period for prime earning. Our salary is generally higher than before, while the costs associated with owning a home or caring for elder family members are often still a few years away.
By paying attention to spending and saving habits, our 30s can be an ideal and opportune time to build a nest egg or make it bigger. Then, by the time 40 arrives, you’re already a few steps down the road to financial security and a comfortable retirement.
If you’re in your 30s and looking for ways to give your savings a boost, here are five tips to implement now.
Dispense with any debts
If you’ve been dealing with the punitive interest charges associated with credit card debt or still have money owing on an old student loan, your 30s is the time to take care of these balances and put them in your past. When any portion of our income is eaten up by interest charges, it diminishes our ability to put money towards more useful avenues, such as savings.
Resist lifestyle creep, and learn to live with less
Most people earn more money in their 30s than they did in their 20s. However, as income increases, it’s easy to find your spending goes up, too. While for some, this may be due to new financial responsibilities, others are guilty of lifestyle creep, constantly upgrading their standards (and stuff) at great expense, but little gain.
Unfortunately, ‘lifestyle spending’ doesn’t deliver any financial rewards for the spender. The more you blow on trips, meals, cars, and clothes, the less you have left over for long-term savings.
Focus on enjoying a few select luxuries with personal significance, or smaller rewards that won’t break the bank, like a nice bottle of wine instead of a new suit or a trip. If you can learn to live below your means, making do with a slightly smaller house or an older model car, you’ll be able to put more money towards your future.
Automate the process of paying yourself
Saving is easiest when it’s so simple, you don’t even have to do anything. If you’re in your 30s and haven’t already done so, set up automatic transfers that send a deposit to your savings account, retirement fund, or anywhere else you’re putting money away every time you get paid. The ‘out of sight, out of mind’ factor prevents you from falling victim to temptation and spending money you planned to save. Even if it’s just a few dollars a week, you’re paying yourself with these deposits, putting the money into a high-interest account, investment fund, or somewhere else, sitting back, and letting it grow.
Take advantage of employer matching plans
If you’re fortunate enough to work for an employer who matches some percentage of your contribution towards a registered retirement plan, make sure to take advantage of their generosity. This free money is a fantastic way to top up your savings total at a point in life where you’ve still got plenty of time for the power of compounding interest to turn those extra dollars from your employer into something more meaningful several years from now. While you may be required to make a minimum contribution in order to activate the employer’s matching plan, it’s well worth it.
Invest for income as well as growth
Investments typically fall into two broad types: growth and income. With growth, the idea is to eventually benefit from a slow and steady rise in the value of the investment. Income investments, which can also grow in value over time, also pay out some sort of regular dividend to the investor. While most younger savers are more concerned with the long-term opportunities provided by growth investments, smart investors look for growth opportunities that also offer income, then re-invest their dividend payout to increase the total value of their investment.