Do you want to talk about money? If you are like most people the answer is NO! Here is the
thing though, if you do talk about it and think about it in your 30’s you can create a foundation
for a secure financial future.
I know you are thinking, but I still have student loans and the kids expenses are racking up how
am I supposed to try and build a foundation for my money and why can’t I just wait till my 40s?
- Accumulation phase – by the time we hit our 30’s we are tired of our college furniture, we are upgrading housing, our first set of plates looks like we had a throwing contest with them. We just tend to buy more things.
- Kids! The average age of a first time mom is 25, so our late 20’s and 30’s revolve around adding kids expenses to the list. Clothing (because they grow amazingly fast), activities(they need to be well rounded), diapers, food, the list goes on and on. Plus, we may end up with one parent staying at home so there is less income.
- Too far down the road. We all have our own set of time perspectives, some of us think only about today, some about yesterday and very few of us about 25 years from now. Time moves faster than we anticipate, so if we only focus on today then tomorrow will be here before you know it. It feels like just yesterday I was 27 and today I am 37! Before I know it 47 will be here.
- We still have school debt and other 20s type’s of debt. Heck, some of us (doctors) are just hitting the workforce.
The thing is we have to get past all the excuses we use to stop us from saving. I know that kids
are expensive, but retirement is too, and I want to be able to retire! Why?
The younger you are when you start to save, the more money you will have retirement! If
you save in your 20s and then never save again, you will end up with more at retirement than
someone who starts in their mid 30’s.
I hear you “but I am already in my 30s”.
Here is the thing, if you wait till your 40s the same is true, you will have more by starting today
in your 30s than by waiting till your 40s.
This is because of compounding – the short version being that your money makes money and
then the new money makes money and the cycle keeps repeating. If you never put the money
into savings it never gets to make money!
How to Get Started
While it is important to get saving right away there are two things you should do first.
Establish an emergency fund – emergencies happen, we cannot hide from them. I know
for myself at least 3 major emergencies that have happened in our 30’s (Dang economy, housing market
and weather). However, our emergency fund has allowed us to manage through and not
pile on more debt and unnecessary stress.
Live on less than you make – if you are not spending less than you bring in each month it
does not make sense to be saving. The overage has to come from either debt or savings
and this will wipe out any progress you have made. Reduce expenses then save.
After these two items are in place, set up an automatic savings system. This can be anything
from your 401k, and IRA or just a regular mutual fund. It does not have to be a large amount, as
every bit helps. There are even accounts that you can save in for $25 a month – that is less than one pedicure.
The important part is to get started. You can always add more as you go.
Thank you to guest blogger:
Andrea Travillian helps untangle your money mess and start creating your financial freedom.
You can learn more about investing with her series on Investing Without a Planner, you can also
find articles debt reduction and more at her blog – Take a Smart Step.