A Financial Checklist for 30-Somethings

These five steps will get your money on the right track during this make-or-break decade.

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A generation ago, most 30-year-olds were full-fledged adults, with homes of their own, families, and jobs. Today’s 30-somethings take a little longer to grow up. They delay marriage and are slower to settle into careers. That means their finances often bloom later, too. So what should a 30-year-old really have accomplished, financially-speaking, by the time that milestone birthday rolls around? Here’s a checklist, along with tips for how to get there:

1. Put at least 10 percent of your income towards retirement. In Generation Earn, I explain why it makes sense to save at least one-quarter of our income, with a hefty chunk of that going towards retirement savings. That’s because we have no choice but to support ourselves after we’re done working, since pensions barely exist anymore and the Social Security trust fund is at risk. It will start taking in less than it pays out around 2016, and by 2037, as today’s 30-somethings start thinking about retiring, it’s scheduled to run out. At that point, if nothing changes, the benefits will shrink to about three-quarters of what they are now because only money that is then being paid into the system will be paid out. 

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Workers have clearly gotten the message that they’re largely on their own: New numbers from Charles Schwab reveal that almost half of the general population say they do not plan on counting on Social Security as a source of income in retirement.

According to Ibbotson data that Liz Weston quotes in her book The Ten Commandments of Money, 30-year-olds should save different amounts depending on the size of their gross income: A worker earning $40,000 needs to be putting away 10 percent of his income, while someone earning $80,000 should save 13.6 percent. In other words, the more you earn, the more you should tuck away for the future. By that next big milestone birthday, 40, you should have saved $21,824 if you earn $40,000 and closer to $60,000 if you earn $80,000.

The best way to reach that goal is to start slowly, even with a contribution of just 2 or 3 percent, and then to increase that amount over time. Make use of tax-advantaged accounts, such as 401(k)s or Roth IRAs, as well as any matching benefit that your employer provides.

2. Say goodbye to wasteful splurges. Sure, we all need a little pick-me-up every now and then in the form of a latte or a new outfit, but by the time you’re 30, you’ve probably figured out which expenditures make you really happy and which fizzle fast. It might make perfect sense for you to buy a $500 bike if you plan to ride it to work most days, but that $200 cashmere sweater? It might sit sadly in your closet after a few spins around town.

To make sure you’re spending in a way that makes you happy, keep track of your expenditures. Free online tools such as Mint.com or software available through your bank’s online interface can help you do that. Then, make the necessary adjustments.

3. Treat your time like the valuable asset it is. At some point, our mortality hits us, and we realize how little time we really have. That’s why it makes sense to keep your financial life as simple as possible, by automating whenever possible. Set up online bill payments, automate savings transfers, and shop online where it saves time and money.

Since you’re spending so much of your time online, make sure you’re staying safe, because you don’t have time to deal with identity theft, either. Change your passwords regularly, avoid clicking on hyperlinks sent to you in an email, and if a website looks at all suspicious to you, close the browser immediately. Never share your Social Security number online, especially if a site asks for it during the checkout process. Also, check over all your credit card statements carefully, because a strange charge can be the first sign of a problem.

4. Take care of others. Even before having a family of their own, many 30-somethings find themselves responsible for a younger sibling who needs assistance, or parents. A Charles Schwab survey found that 2 in 5 respondents expect to provide financial support to their parents at some point, and 1 in 4 anticipates needing to give money to siblings.

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If you find yourself in this situation, then it’s even more important to check up on your own financially stability. Establish your emergency fund and pay off expensive debt as soon as possible. And if you truly cannot afford to help out your needy family members, don’t hesitate to be honest with them, and look for ways to provide non-monetary assistance, such as sharing meals or a roof.

5. But invest in yourself, too. As we get older and take on more responsibilities, it’s easy to forget about own needs and dreams, especially those we had as ambitious 20-somethings. Keep yourself on track by regularly asking yourself where you want to be in another five and ten years, and take steps to get there. Brainstorm with your partner or close friend to shake loose any latent dreams that have fallen off your radar. Do you want to invent the next big cupcake recipe? Star on your own reality television show? Think big; this is the decade where your education and early work experience can finally pay off.

To work towards those goals, network with senior people in your field, invest in career advancement coaching or classes, and keep in touch with changes in your field through blogs, websites, and books. If you get stuck in a career rut, or take a workplace break to care for children or aging parents, it can be hard to feel like you’re making progress, but online tools and outreach make it easier.

The 30s might be the new 20s, but they can also be older, wiser, and richer.

Kimberly Palmer (@alphaconsumer) is the author of the new book Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back.