Money Habits for People in Their 30’s.
I will be celebrating the last year of my 30s in January of 2023, so I am what you would call an “elder millennial”. I didn’t learn too much about money growing up, like most people my age, we were raised in an era of not really learning about our parents' investments or the type of insurance they chose. I knew I needed to have a good credit score, but not really all of the rules on how to achieve that. I lived paycheck to paycheck during most of my 20s and used my money as I needed it. But then I stopped living paycheck to paycheck and just had extra cash on hand. Once I entered my 30s, I became more interested in using my money for my future. Here are some really great habits to inject into your 30’s that will help you be financially secure.
Paying Attention to your credit score. A base credit score is around 300 and the highest around 850, depending on the scoring model you’re looking at. According to a recent report from Experian, just 1.2% of Americans have a score of 850 or above. If you have debt from credit cards, paying that off can improve your score significantly. Pay your bills on time, stay below your credit available credit limit, keep cards and/or accounts open, and monitor your score to make sure any adjustments that need to be made, are.
Not just wing it with your spending. It’s hard when you see cash in your bank account to not let it burn a hole in your pocket. A little impulse treat here, an online shopping purchase there, and before you know it, almost all of your money is gone. Spend one month tracking your spending. If you’re spending too much on an area that you don’t want to, then limit that. For example, if you see that you spent more on going out to eat than what you want, try limiting the times you go by half and see if that’s more where you’re comfortable in the amount of money that’s going toward that. Adjust from there. Once you have an idea of how much you don’t mind spending in an area of your life, and how much you don’t want to spend it in other areas, you’re more likely to think twice before your purchase. After you have that budget in place and are practicing it, you will have a better sense of what you can actually afford.
Growing your money with investments. It is a true statement to say that the sooner you invest, the better you will be later on. Get a retirement fund started and invest extra cash. This is an area where it is worth it to pay for an advisor who can do all of the work for you to start investing your cash. The stock market has been around for over 200 years, it works. Investing your money can help you build wealth by having your money do work. Investing can include stocks, bonds, mutual funds, ETFs and even real estate. The best place to invest your money is going to depend on factors like your income, your extra cash, your age and your goals. Hiring a professional to watch your money for you while it works is like having a babysitter for your investments, and who will keep an eye out for your money. With your liqued savings, have a set dollar amount taken from each paycheck automatically deposited into your savings account until your ideal number is reached. Make it an amount you won’t miss too bad at first, maybe twenty or fifty bucks a paycheck. Once you reach your goal amount of liquid cash you would like to keep, you can take the remainder and invest it.
Don’t pay for surprises with credit. Personal finance experts recommend having 3-6 months worth of expenses saved up in an emergency fund. This cash should be used only for instances like a job loss or getting hit with a surprise repair. Knowing you have that money set aside will help you feel so much more secure and also enjoy spending other parts of your budget on things you want to. You can keep this money somewhere that’s easily accessible but also earns some money. Some ideas can be a high-yield savings account or a money market, a CD (but these sometimes require a specific amount of time that the money be in the CD).
Use your credit card as much as you can throughout the month. All of your utilities you should have set up as auto pay on your credit card and then PAY IT OFF with the cash in your checking account. And take FULLLLLLL advantage of those rewards. In our family, we use our travel card for our utilities and get travel points each month. We’re saving our points for a big mom & dad only vacation. Amazon purchases go on the amazon card, because we save up our amazon points and splurge on something BIG at the end of the year. Daily spending and gas go on a cash rewards card because we get cash back on stuff we are already going to buy anyway.
By utilizing that budget and already having an emergency fund and investments set up, you can feel more confident that you can pay these cards off each month and not over spend.
Eventually, someone is going to catch on and start hosting “how to be an adult” seminars that will be full of educated and competent people that just never learned this stuff. But until then, hire a good professional for anything that will affect your life so deeply as your health and your money. We can be both financially responsible AND have the life we want.
-Sylvia McCormick Burns (Co-founder Oakview Wealth Solutions)