If there’s one constant in your 30s, it’s change: maybe you’re changing jobs or just bought your first home. Perhaps you’ve just welcomed your first child or your third. You may have even done all three, but those milestones all have one common thread - they require financial responsibility.
You measure your financial decisions a little differently now, so it makes sense that you need a different roadmap to stay on track to your new goals. This financial plan should accommodate your responsibilities today, as well as your future obligations.
There’s a lot going on during this stage of life; you’re in a phase between establishing your life while also planning your path to retirement. If you’re a parent, you’re also setting an example to your young children, teaching them the importance of mindful spending, and saving- fundamental lessons that will carry them through life. By implementing good financial habits now, your goals will feel more tangible.
Invest your windfalls, raises and bonuses
Becoming more established in your career can mean rising salaries and better bonuses, which is good news for your retirement plans. Instead of rushing out to make a big-ticket purchase, consider splitting your year-end bonuses or other windfalls into three parts: saving, paying down debt, and spending.
Setting up automatic contributions to your RRSPs helps avoid temptations of spending that money, and lets you take advantage of the longer savings growth. But investing in your savings isn’t the only way to help your future self – paying down debt is key. Taking a portion of those windfalls and paying off debt will help free up cash for the future. Now that you’ve covered off the first two, rewarding yourself for your hard work is still important. Having a spending budget will allow you to still indulge while not risking your retirement plans.
Balance debt payoff with retirement investing
Seems like the big task – paying off debt and saving at the same time. But saving for retirement needs to be a nonnegotiable in your 30s. Let’s be real, there will always be conflicting priorities in your finances, but the longer you wait, the more you will have to save later. A simple rule to follow while trying to balance saving and paying down debt: allocate 10% of your income to your financial priorities, including debt. This 10% can be flexible, maybe your needs are to get those student loans or credit card debt paid and you contribute to your company’s pension plan – then divert as much as possible to accelerating paying off that debt. Your future self will thank you – we promise.
Increase your retirement contributions
It’s fine to have a few mishaps in your 20s. But by the time you hit your 30s, you’re nearing your peak earning years — meaning that you’ll need a solid grasp on where you stand financially.
Take advantage of the power of compounding interest early – interest you earn on your principal which can dramatically affect the value of your money over time. Meeting with your Advisor regularly to review your plan and make adjustments will ensure that you’re still hitting your targets for retirement.
30s are an incredible time to lean into strategically thinking through your retirement and investment journeys and it’s okay to ask for advice on how to begin. Starting now, will allow you additional budget flexibility in the future. By allowing that time and compounding interest you can achieve your goal for living out your retirement to the fullest. Book an appointment with an expert Advisor to jump start your retirement savings plan today.
