Once you hit your 30s, it is time to get serious about your finances and money skills. Here are the top money lessons you need to master this decade.

Source: 6 Financial Lessons to Master by the Time You’re 30

6 Financial Lessons to Master by the Time You’re 30

By Ashley Eneriz

When you hit your thirties, you might still feel young and invincible. The scary truth is that you are half way to retirement. It is time to put the money foolhardiness of your twenties behind you and master these top financial habits.


Most 20-somethings have played around with the idea of a budget, used a budgeting app and even read an article or two about the importance of creating a budget. However, very few individuals actually stick to a budget. Once you are 30, it is time to ditch the wishy-washy process of budgeting. It is important to allocate where every dollar you earn goes and actually commit to the plan. This means if you only want to spend $15 a week on coffee runs, then you will have to cut yourself off after your third latte for the week. (For more, see: Getting to Know the Money Market.)

The importance of budgeting is not to live in depravity. Instead, it is crucial to know where each dollar goes. It is fine if you spend money on shopping or fun trips, as long as these purchases fit in your budget and do not detract from your saving goals. Knowing your spending habits will help you discover where you can cut expenses and how you can save more money in a retirement fund or money market account. (For more, see: Do Money-Market Funds Pay? and The Money Market tutorial.)


The wealthiest individuals in the world did not get to their high financial position by spending their entire paycheck each month. In fact, many self-made millionaires spend their income modestly, according to Thomas J. Stanley’s book, “The Millionaire Next Door.” Stanley’s book found that the majority of self-made millionaires drove used cars and lived in average-priced housing. He also found that those who drove expensive cars and wore expensive clothing were actually drowning in debt; their pricey lifestyle could not keep up with their paycheck.

Start by living off of 90% of your income and save the other 10%. Having that money automatically deducted from your paycheck and put in a retirement savings account ensures you will not miss it. Gradually increase the amount you save while decreasing the amount you live off of. Ideally, learn to live off of 60 – 80% of your paycheck while saving and investing the remaining 20 – 40%. (For related reading, see: Stop Keeping up With the Joneses—They’re Broke.)


What are your financial goals? Really sit down and think about them. Write them down and figure out how to make them a reality. You are less likely to achieve any goal if you do not write it down and create a concrete plan. For example, if you want to vacation in Italy, then stop daydreaming about it and make a game plan. Do your research to discover how much the vacation will cost, then calculate how much money you will have to save per month. Your dream vacation can be a reality within a year or two if you take the right planning and saving steps. The same is true for other lofty financial goals, such as paying off your debt or saving enough money for a down payment. (For an interesting read, see: Save $30,000 for a Home Down Payment in 5 Months.)


Many individuals become complacent about their debt once they hit their thirties. For those with student loan debt, mortgages, credit card debt and an auto loan, repaying debt has become another way of life. You might even view debt as normal. The truth is that you do not need to live your whole life paying off debt. Assess how much debt you have, outside of your mortgage, and create a budget that helps you avoid gaining any more debt.

There are many methods to pay off debt, but the snowball effect is popular for keeping individuals motivated. Write down all of your debts from smallest to greatest, regardless of the interest rate. Pay the minimum payment for all of your debts, except for the smallest one. For the smallest debt, throw as much money as you can at it each month. The goal is to get that small debt paid off within a few months and then move on to the next debt.

Paying off your debts will have a significant impact on your finances. You will have more breathing room in your budget, and you will have more money freed up for savings and financial goals. (For related reading, see: 10 Simple Steps to Financial Security Before 30.)


An emergency fund is so important to the health of your finances. If you do not have an emergency fund, then you are going to be more likely to dip into savings or rely on credit cards to help you pay for unplanned car repairs and health expenses. The first step is to build your emergency fund to $1,000. That is the minimum your account should have. By putting $50 of each paycheck in your emergency fund, you will hit the $1,000 emergency fund goal within 10 months.

Once you hit the $1,000 goal, don’t stop there. The next goal is to establish three to six months of living expenses. Therefore, if your current budget utilizes $4,000 each month, then your goal should be to save $12,000 to $24,000. Reaching this financial goal will take time and perseverance, but it will protect you if you ever face a medical crisis or a job loss in the future. (For more, see also: Emergency Funds That Are Right for Your Tax Bracket.)


Most people either enter their 30s without having a single dime contributed to their retirement, or they are making the minimum contributions. If you want that million-dollar nest egg, you have to put in the savings now. Stop waiting for a promotion or more wiggle room in your budget. In your 30s, you still have time on your side, so don’t waste it. Make sure that you are benefiting from your company’s matching contribution. Many companies will match your contributions up to a certain percentage. As long as you stay with your company long enough to become vested, this is basically free money for your retirement.


When you have bad financial habits in your 20s, people chalk it up to young age. You will not continue getting sympathy for poor money management skills once you enter your 30s. The financial lessons you master now will greatly benefit you for the rest of your life.

Read more: 6 Financial Lessons to Master by the Time You’re 30 http://www.investopedia.com/articles/investing/092815/6-financial-lessons-master-time-youre-30.asp#ixzz3rgQzULZZ
Follow us: Investopedia on Facebook