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How to build wealth in your 30s?

How to Build Wealth in Your 30s

You can build wealth in your 30s by budgeting your income, using employer benefits, saving for retirement, and building an emergency fund. The key to building wealth is monitoring your money and looking for ways to make your money work for you. For example, a retirement account can help you grow wealth. In fact, most people under 35 already have about $30,170 saved for retirement!1 

If you’re in your early or late 30s, know that you can start making the most of your money to build security for your future. If you want to know how to build wealth in your 30s, keep reading! 

Budgeting Your Money

Budgeting involves tracking your income and spending to come up with a financial plan for your money. There are all kinds of budgeting methods out there, and the best one for you will depend on your goals. 

The Benefits of Budgeting 

Take a look at some of the benefits of budgeting in your 30s:

Pros of BudgetingDescription
Control Over MoneyBudgeting gives you a clear understanding of where your money goes and helps you manage it wisely.
Helps Achieve Financial GoalsBy setting spending limits, you can save towards goals like building an emergency fund or buying a home.
Reduces Stress and Financial AnxietyKnowing you have a plan for your finances can reduce worry about unexpected expenses.
Avoids OverspendingA budget keeps you from spending more than you earn, preventing debt accumulation.
Prepares for EmergenciesRegularly contributing to an emergency fund ensures you’re prepared for unforeseen costs.
Facilitates Wealth BuildingBudgeting can free up money to invest and grow your wealth over time.
Improves Spending HabitsTracking expenses can highlight areas where you can cut back and spend more efficiently.
Increases Financial SecuritySticking to a budget can lead to increased savings, which contributes to long-term financial security.
Helps Identify Money LeaksYou can spot and stop small, unnecessary expenses that add up over time.
Prioritizes Debt PaymentsYou can plan for systematic debt repayment, reducing interest fees and improving credit score.
Maximizes Savings for RetirementBudgeting allows you to consistently contribute to retirement accounts for a secure future.

Common Budget Plans

Here are some basic budgets that anyone can follow if they are just getting started with managing their money:

The 50/30/20 Budget

The 50/30/20 budget involves splitting up your income into three categories of expenses. 

  • 50% of your income will go towards necessities
  • 30% will go towards recreational spending
  • 20% will need to be put into savings

This budget provides a good balance of spending and saving, and you don’t have to worry about how much you allocate towards each spending or savings category. 

The Zero Sum Budget 

The zero-sum budget is one of the simplest budgeting methods out there. To follow the zero-sum budgeting method, you will need to “spend” all of your income. You will have to create some spending and savings categories, and either before or after you get paid, you will have to allocate all of your money to them. 

For most people using this budgeting method, any leftover cash at the end of the month will be then allocated towards their savings. This budget can help you be more mindful of your money rather than just spending any leftover funds you can use for something worthwhile. 

Envelope System Budgeting

To do the envelope budgeting system, you will need to create envelopes (you can use various apps or have physical envelopes) and have a budget for each category. You can then add your funds virtually or physically into these envelopes. As your month progresses, you can pull from each envelope, and once it is empty, you will know that you have spent the maximum amount. 

The envelope budget can definitely be fun and useful; however, it may take a few tries to get the category maximums or minimums right. 

Pay-Yourself-Budget

The pay-yourself-budget is one of the most rewarding and doesn’t compromise saving money. The plan here is simple: you pay your bills and recreational expenses first, and then whatever money you have left over should be put into a savings account. 

If you aren’t ready for an extremely tight budget right away, the pay-yourself budget can be an excellent place to start. However, if, over time, you find that you aren’t able to save money like you may have wanted, it may be worthwhile to try a stricter budget. 

Take Advantage of Your Employer’s Benefits

Depending on your employer, you may have benefits other than healthcare. You may not think using these benefits may be worthwhile, but they can help keep more money in your pocket and, in some cases, help you with planning and saving for your future. 

Here are some common benefits you may find at your job: 

Commuter Benefits

Many people have to go into an office five days a week, and some companies will either reimburse that cost or provide extra funds for it upfront. If you are also a commuter, it may be worthwhile to ask your employer or HR department whether your company offers commuter benefits. By taking advantage of these perks, you could be looking to save up a few hundred dollars a month! And that money could go towards your savings or any other goal you may have. 

A Work-from-home Credit

Due to the 2019 pandemic, many workplaces switched to remote work. Because of this, many companies offer a work-from-home credit, which can help employees purchase any necessary items so they can work from home successfully. 

Wellness Credit

This can be one of the most money-saving benefits out there! A gym membership or classes can cost a few hundred dollars a month. So, take advantage of employer discounts or credits to save more money every month. 

401k Match

A 401k is essential to your financial future, and many employers will match contributions up to a certain amount. Although a few thousand may not seem like much, even a small contribution, when matched, can really help you plan for your future.

Phone Bill Reimbursement

If you use your phone for work, then you may also get your phone bill covered by your employer. That could mean savings of a few hundred dollars a month and a few thousand dollars annually.  

Creating a Savings Plan for Retirement 

Most people in their early 30s may not think of a retirement plan. However, planning for retirement is an essential part of planning for your financial future! And so, if you don’t have retirement accounts, retirement income, or a plan, then it is critical that you start. A certified financial planner can help you grasp everything about retirement planning, but you can also get started on your own with some basics. 

Here are some things you can do on your own: 

Set Up a Roth IRA

An individual retirement account or IRA can be set up at a bank, credit union, or other financial institution. One of the most significant benefits of IRAs is that they are tax-free when you retire and take out the funds. Any return from the account will come from investments and compound interest. Most account holders average a return of 7%-10%. 

Set Up Your 401K

As mentioned above, a 401k is a retirement account from an employer. By contributing to your account, you may also see a match. Like your Roth IRA, a 401k can help you become financially secure by the time you’re ready to retire. 

Create a Solid Emergency Savings 

Another thing you can do to set yourself up for financial success is to have an adequate savings fund for emergencies. A solid emergency fund is vital, as it can mean staying afloat if unexpected expenses come up. It can also help you stay away from predatory loan options like payday loans. You know you’re dealing with a predatory lender if they offer extremely high interest rates and loan fees

No matter where you are with your financial planning or savings goals, having a savings account will be essential to your financial health! You can start saving with just a few hundred dollars a month if you haven’t done so before. One way to ensure that you save is to set up automatic payments to your savings account every time you get paid or every month.

Pay off Your Debt 

Whether you have student loan debt, credit card debt, or high-interest debt from loans, it will be a good idea to pay them off if you are trying to build wealth in your 30s. Higher interest debt can really tie up your income and prevent you from investing in future financial goals, not to mention losing money through high interest. 

And so, it will be helpful to really think about a debt repayment plan. You can aggressively pay off credit card debt and loans if you have a large take-home pay and minimal living expenses. On the other hand, even paying more than the minimum monthly payment can help you get rid of debt. 

There are all kinds of debt repayment strategies that you can pursue on your own. But if you struggle with financial irresponsibility, credit counselors and financial planners can help! Paying off debt can also help you get a better FICO score, which can mean access to financial products that can help you build even more wealth. 

Invest Wisely for Wealth Building 

Investing is a great way to earn passive income—making your money work for you—and build wealth. There are all kinds of investment options out there; some are riskier than others. A few examples of investing include real estate investing, bonds, stocks, mutual funds, etc. If you haven’t invested before, talk to a financial advisor who can look at your finances and help you develop an investment portfolio. 

FAQs About How To Build Wealth in Your 30s

What are some tax-advantaged savings options I should consider to build wealth in my 30s?

Great question! To maximize your wealth-building efforts, consider contributing to a 401(k) or an IRA. These retirement accounts offer tax advantages that can grow your money more efficiently over time. For instance, a traditional IRA may provide tax deductions now, while a Roth IRA offers tax-free growth for the future.

How much should I aim to have in my emergency fund to ensure financial stability in my 30s?

It’s wise to aim for three to six months’ worth of living expenses in your emergency fund. This ‘safety net’ can protect you from unexpected costs without derailing your financial goals. Think of it as a buffer that keeps you on track to build wealth, even when life throws a curveball.

Is it really possible to receive ‘free money’ for my retirement savings, and how can I take advantage of it?

Absolutely! If your employer offers a 401(k) match, that’s essentially free cash for your retirement savings. Make sure you contribute enough to get the full match; it’s a part of your compensation package, after all. Not taking full advantage of this is like leaving money on the table.

At what age should I start seriously planning for retirement age, and what should my retirement plan include?

It’s never too early to start, but building wealth in your 30s is a great time to get serious about your retirement plan. Your plan should include a clear financial goal, a strategy for saving in tax-advantaged accounts, and a diversified investment account portfolio to prepare for retirement age.

How do interest payments affect my ability to build wealth, especially if I have existing debt?

Interest payments on debt can eat into your ability to save and invest. Prioritize paying off high-interest debt to reduce these payments. This will free up more of your income to put towards your financial goals, like saving for retirement or growing your investment account.

What’s the best strategy to handle debt payments while trying to build wealth in your 30s?

A balanced approach works best. While making minimum debt payments, also contribute to your retirement savings, especially if your employer offers matching contributions. Once you’ve secured that ‘free money’, consider allocating extra funds to pay down debts faster, starting with the highest interest rates first.

How do I create a financial plan that balances enjoying life now with building wealth for the future?

Creating a financial plan that balances present needs with future goals involves setting clear priorities. Allocate funds for current enjoyment, but also commit to regular contributions to your retirement savings and investment accounts. 

CreditNinja: A Summary on How To Build Wealth in Your 30s

You can take all kinds of steps if you want to build wealth in your 30s, and even if you are older, it is never too late to start! Financial moves like budgeting with irregular income, paying off debt, retirement planning, creating an emergency savings account, and investing can all help you build wealth! 

CreditNinja aims to help Americans make the most of their income. That’s why we offer financial articles on our website. Learn 60 ways to go green and save money, how to reduce your loan fees, and much more. And if you ever find yourself in need of fast emergency cash, apply for our online loans. CreditNinja installment loans have numerous positive online reviews, so rest easy knowing you’re in good hands!   

References:

  1. What is the average retirement savings balance by age? │ Edward Jones
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