Your 30s are pivotal to setting the stage for long-term financial health. Investing and savings habits started in your 20s have (hopefully) become ingrained, and you’re well positioned to achieve critical milestones ahead of your prime earning years, and your eventual retirement.
Unfortunately, too many Americans aren’t saving enough to set themselves up for long-term prosperity. According to the Bureau of Economic Analysis, personal savings rates were only 3.4%, as of September 2023.
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These 5 magic money moves will boost you up America’s net worth ladder in 2024 — and you can complete each step within minutes. Here’s 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’s almost never too late. There’s still time to position your portfolio for success, whether you’re 30 or 50. Let’s explore.
Build 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 don’t have an emergency fund, 49% wouldn’t have the ability to cover a $1,000 emergency from cash resources, and 40% would have to resort to covering an unexpected expense with their credit card.
By saving three to six months of living expenses, you can avoid debt when unforeseen circumstances arise. Start by setting a realistic savings goal, then automate your savings by setting up a direct deposit from your paycheck into a high-yield savings account. Aim to save at least 10-15% of your income until you reach your target.
Pay off high-interest debt
The Federal Reserve reports that as of May 2024, the average credit card interest rate was around 21.5%, making it one of the most expensive types of debt. High-interest debt can accumulate quickly, making it harder to pay off your principal and jeopardizing 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 that debt is settled, shift your efforts to the one with the next highest interest rate.
Another option is the snowball method, which focuses on paying off the smallest debts first. The idea is that by getting those early wins, you’ll gain the motivation you need to keep going.
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Start or maximize retirement contributions
An April 2024 AARP survey found that one in five Americans 50 and over have nothing saved for retirement. Don’t be caught flat-footed: The earlier you start saving for retirement, the more compound interest kicks in, allowing your investments to grow exponentially.
Combat that trend by taking advantage of your employer’s 401(k) match and contributing at least enough to get the full match. Then, work toward contributing to retirement accounts, and consider increasing contributions whenever you receive a raise or bonus.
Consider home ownership
Homeownership is a wealth-builder for many. The National Association of Realtors reported in June the median home price in 2024 was $419,300, with home equity representing a substantial portion of net worth for many Americans.
When buying a home, save for a down payment of at least 20% to avoid private mortgage insurance (PMI) and secure a better mortgage rate. Improve your credit score to qualify for lower interest rates, and consider first-time homebuyer programs and grants that can assist with 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 dips 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 adviser can help you develop a personalized investment strategy.
Catch up on 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 put you back on track.
Also, consider making catch-up contributions in retirement accounts. Individuals over 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.
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