As you enter your 30s, the way you manage your finances has a ripple effect on the rest of your life.
I thought it’d be interesting to share six financial goals that will help set you up for the future.
In this blog we discuss all things related to personal finance, crypto, Investments and business.
- Career capital
- Mortality Fund
- Measure It
- Eggs in Different Baskets
- Making Money as your Labor.
- Credit card & Consumer Debt
1. Career Capital –
First goal you want to focus on is career capital and this is the ultimate foundation or can be called as your stepping stone for building everything.
Cal Newport defines career Capital as
“Skills you have that are both rare and valuable and that can be used as leverage in defining your career”
While your 20’s is all about exploring and trying new things, failing fast & failing forward.
Your 30’s is about really doubling down on what you enjoy and what can give you the most leverage in terms of pay and reward.
People focus on passive income and try to grow it straight away and yes that is important, but I actually believe that active income is more important when you’re just starting out and the reason for that is because active income at the start is your primary wealth building tool and the money you make from it is essentially going to dictate how quickly you can grow your other income streams.
For example, if I’m able to invest $50 dollars and my portfolio returns 20% then I would have made ten dollars, but if I’m investing two hundred dollars and my portfolio returns only 10%, I would still make $20 dollars which is more than the previous one.
So, putting more emphasis on earnings potential and increasing your active income i.e., your primary source will have a multiplier effect, because you can also use that money towards other streams in a way that makes the other streams more passive as well.
So, my first priority is to see how much I can max-out my salary from my everyday job, pushing for the pay hikes, promotions and then that income and managing my finances has then allowed me to spend more on other streams where I’ve seen the growth has been a lot quicker because I’m investing more money into it to outsource it and to get things done.
So, your 30s are really about finding your Niche positioning yourself for the most rewarding jobs. So that you can use it to build out.
2. Mortality Fund –
Build a mortality fund that needs to be liquid cash in a high interest savings account which is not locked up anywhere, just easily accessible.
When you get into your 30’s a lot of responsibilities come all at once, you may have kids, you may have a mortgage, bills to pay.
We generally don’t have as much flexibility and options as we did in our early 20’s.
If something happens whether it’s a health-related issue, losing your job or something unexpected, the last thing you want is the additional Financial stress of not having enough money to pay for it.
Personally, I always keep six months of my living expenses in my emergency fund in a separate account and I never ever touch it.
It is a high interest earning savings account so I’m at least earning something while it’s resting there and I don’t even see it because I don’t want it to remind me that that money is readily available.
It’s just there to give me some mental peace that if anything happens I always have that to fall back on.
If I really need it, I have six months of a buffer, the recommended amount is three to six months and if you’re self-employed it’s six to twelve months.
3. Measure It –
People who are good with their finances and managing their money measure their money.
By clearly knowing their long-term saving goals and how they are working towards them, you just drift aimlessly with no clear motive on how much you want to save or spend.
You are going to get swept away with marketing messages and everything else that’s telling you what you should be spending your money on and you’ll find it very hard to save up for anything substantial.
So, I suggest you use a finance tracker, sit down with all your bills, all your debit cards, all your credit cards and consolidate everything into the tracker so you have a clear idea of all your earnings and spending’s.
With this you get a clear idea on where most of your money is going and then how you can cut down in areas that aren’t as important to you just to make sure you’re not going off track from your overall saving goals.
4. Put your Eggs in Different Baskets –
Putting your eggs in different baskets, as we spoke at the start about increasing your active income but that’s one part of it, the other part is having an income stream portfolio that can withstand different situations.
Because if you only have one stream you’re in a risky position, right now I have five or six ways that I’m making money both online and offline and there have been times where one of them has taken a hit but I was okay, because I have another one coming through.
For example, one of my income streams is through properties but that stream has taken a hit because of what’s going on in the Wider market and also the interest rates, but it hasn’t impacted me because I have other streams coming through and making more money.
So, my message is: don’t stop with one, no matter how secure you believe that stream is, even if it is working for a corporation.
We are taught that a job is a secure and non-risky path, but all it takes is one person in the company somewhere along the ladder to decide and everything changes.
I’ve seen this happen to so many people around me that I constantly tell in my blog not to stop with your corporate job and not to trust that someone else or a company will take care of you just because you’ve been loyal to them.
The best way to provide yourself with options is to prepare yourself for different circumstances and diversify your income streams.
5. Making Money Your Labor –
Making money as your labor and work for you is possibly the most important one in the list if you’re focusing on building true wealth.
It is an extension to the previous point but it’s more important for the future than for diversifying your rest right now, because what you do with your money now will dictate how you’re going to live in 10 to 20 years’ time.
If you keep earning and saving it all and leaving it in a bank account then by the time you retire, your savings will start getting exhausted pretty quickly because of inflation.
However, if you choose to start investing that money then it will keep working for you even when you’re not even earning.
If you do decide to take some time out or retire you can sustain your lifestyle without worrying about running out of cash, so you can invest in different ways you can invest in real estate, gold and precious metals and Fine Art, in index funds, ETFs, etc.
I personally invest in all of these. I set up an automatic investment. A certain amount comes out of my bank account every month straight away and gets invested into a diversified portfolio so you can tailor this portfolio to whatever your financial goals are.
6. Credit card & Consumer Debt –
Paying off your credit card and Consumer Debt when you start looking at debt as a normal way of living, you will start inviting the concept of Lifestyle creep into your life.
We’ve become a debt written nation and having some form of debt has become the standard but in your 30’s especially you want to focus on paying down any credit card or Consumer Debt that you have.
People have different views on debt and my personal view is to stay away from it unless you’re using that debt as leverage and you know that the returns will outweigh the cost of it if you’re not doing that then paying off credit cards and Consumer Debt especially is a wise idea.
I want to emphasize here that although I’ve said these are the things you want to achieve in your 30s that’s because I myself I’m going into my 30s and so these are things that I’m doing and I’m focusing.
But in reality, it doesn’t need to fit everyone’s timeline. I believe a lot of us compare ourselves to others when it comes to defining success and that is the Benchmark and which occasionally this can serve as a motivational factor.
I think it is never really done fairly because no one begins the race at the same starting line and that’s why I haven’t mentioned specific numbered goals in this blog I’ve just told about trajectory, it is never too late to get started.
Hopefully this gives you some tips and guidance and things to consider.
I hope you have learnt something new and learned more tips about money.
Conclusion –
In this Blog, we have discussed the importance of focusing on managing your money in your 30s to set yourself up for a secure financial future.
By setting achievable financial goals like making a budget, saving for emergencies, paying off high-interest debt, investing in retirement, and saving for a down payment on a home, you can improve your financial health.
Taking these steps will help you build wealth and prepare for your long-term financial objectives, giving you peace of mind and security for years to come.
