This post is part of Women’s Money Week 2012. For more posts about Money in Your 20’s/30’s/40’s/50’s/Retirement see Money in Your 20’s/30’s/40’s/50’s/Retirement Roundup.
What happened to my twenties? Wait, I’m still in them. For another year and a few months, I’m a pretty average 20-something: single, no kids, no mortgage, decent job and…debt. What! How dare you! Confession: I was a bit unrestrained for the better part of my twenties. I needed to figure life out, which was great, but I also took a long time to figure money out, which was not so great for my wallet. I’m lucky to have done everything I did in my twenties, but I’m also lucky that I finally got serious about paying off my debt, saving and figuring out how to make more money independently of any job. So while I don’t regret a single minute of my 20s (and they’re not over yet!), I’ve got big plans for my thirties. It’s my chance to be a little more mature but still have plenty of energy to take on new projects, meet new friends and start new businesses. Here’s my plan of attack as I get ready to dominate my finances in my thirties.
Money in Our Thirties Starts to Get Complicated
The good news is that by the time I hit 30, I am on track to have paid off all or nearly all of my personal debt (credit cards, a student loan and an auto loan). I will have been saving with automatic bi-weekly contributions for a year and a half and contributing to my retirement accounts for several years. But there are also much bigger things that happen in our thirties like mortgages, marriages, children and providing for family members that start to make the overall picture more complicated. So what will be different in my thirties and how can I start preparing for it now?
1. Be Cash Flow Positive: The biggest change for me will be coming out ahead each month. Even if it is just $200, start preparing now in terms of expenses, income and future purchases so that you will always have some money left over at the end of each month, after accounting for expenses, debt payments (hopefully none) and savings.
2. Stay Consistent: My 20s were basically filled with instances of me starting jobs, quitting jobs, switching industries, moving to a new town, leaving the country, coming back, leaving again, looking for a new job and basically confusing the hell out of myself. Calm down, self. Sit down, drink a glass of water. One thing at a time. If you were never consistent in your 20s, your 30s are a new start. Focus on developing good habits, developing a career you can continue and progress in and finding out what works with you. You know what makes sense for you when it comes to exercise, work and everything else. Doing something consistently for two years or longer will start to show you returns you never thought possible-whether it’s taking up a sport, learning a craft, working or starting a new business.
3. Develop Ideas and Nurture Your Talents: We all have great ideas. I start my days with big ideas and end my nights brushing my teeth and mulling my latest idea over. The key is developing those ideas and being willing to take the next step. It’s knowing which ideas have to sit for now (creating and marketing a non-alcoholic beverage) and which ones need immediate action (improving my eBay inventory and listing strategy, finding new listing clients, etc). I love selling on eBay and it’s one small thing I’m developing. The success I have with eBay in turn motivates me to do the next thing well. It’s a happy slippery slope.
4. Make Savings a Priority: Make savings an accepted part of every dollar that comes in. Even if it’s just 5 or 10%, you can set up automatic savings transfers with almost any bank account and feel rewarded at the reminder of your growing balance. That savings account begins to represent many different things as you grow older. It is protection against unexpected loss of income, it is security for your children and family. I always feel the most vulnerable when it comes to my family. I want to do everything that I can for them. With debt or crazy financial obligations, I won’t be able to do that. I want to be more grounded in my thirties and a healthy amount of savings is just one small part of that.
5. Find Investments You Understand: Not everyone is going to make money doing complex options trading, volatile commodities trading, or currency trading. Some of us prefer investments we can see, touch or grasp more quickly. You don’t need to be a technical trader to make money off of your money. There are stocks and index funds that you can buy and hold and expect to appreciate in value. There are still real estate properties that can make excellent rental properties. There are also peer-to-peer lending clubs which allow you to invest in individual borrowers based on their credit rating. Start small, but begin your research. Don’t feel intimidated by people who love to use business jargon. Ask questions.
6. Plan Ahead for Upcoming Big Purchases: Most of us in our twenties had a few big purchases like cars, appliances and furniture. Hopefully you were able to purchase these items outright, but you’re not alone if you financed something in the $1,000-$20,000 range. In your thirties, you can expect that there will most likely be another car to buy, more furniture and kid’s expenses. Sub-divide your savings into individual categories so that you will be prepared for your next big purchase. Your thirties will be a lot more comfortable if you do not have a lot of small payments to deal with.
7. Make Your Dreams Come True: We all stumble in our teens and into our twenties. It’s a time of fun, exploration and learning about your own character. You’ll come out of your twenties wiser and more confident. What are your thirties going to be like? Do you know what you want to happen? Do you have big dreams and passions? Do you think you can do it? I say: Start believing in your destiny. All the great ones do. If you don’t, your thirties will pass you by before you know it.
I’m looking forward to my thirties. At 23 and 24, I dreaded getting older. Now I am exactly where I want to be in life. Did you (or do you) dread turning 30, 40 or 50? What did you learn in your 30s that you never thought about in your twenties? I can’t wait to read your comments!