Money Talks: Building Your Wealth in Your 30s

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Our 20s are the time we largely spent on establishing our careers and becoming independent financially from our parents. It is also the time when we, little by little, pay off our student loan debts.

In your 30s, while retirement is still way off down the road, it is time to think about building your wealth. Though building wealth can start as early as high school, most of us never really thought of it until we are threading our career paths and offering company-sponsored retirement plans.

Now that you are in another chapter of your life — your 30s — it is high time to step up your finances. With this said, here is some helpful advice to guide you in building your wealth in your 30s.

1. Figure Out Your Definition of Wealth

For most of us, the words “wealth” and “rich” are used interchangeably. They are not the same, however. While popular media portrays wealth with flashy cars, trendy clothes, gated houses, and a luxurious lifestyle, real wealth is far from that. In fact, a lot of millionaires and wealthy people live in average neighborhoods. They even prefer to drive used cars. Essentially, they are careful with their money.

So, do you want to be one of these people?

The first and most important step in building wealth in your 30s is to define it. What does a wealthy life look like to you? How do you think it would shape your relationships with others or your overall health? Once you have your own definition of wealth, you can start building around it.

2. Set Plan for Your Goals

When you hit your 30s, there are a lot of things you are probably thinking about. These include buying a house, getting married, and starting a family of your own. List down every life goal you have and things you want to require spending some cash.

By having this clear outline of your financial goals, you will be able to prioritize and be reminded of what are those that are important to you. However, keep in mind that as time goes by, these life goals might change and grow. Nonetheless, be open to such changes.

3. Build a Spending Plan

Now that you have clarified your goals, it is time to make your spending plan. With a thorough budget, you will be able to understand your income and expenses. It cannot be overemphasized that the ultimate goal in making a budget is to ensure you spend less than what you earn. By spending less, you will have extra money for your goals.

In building your wealth in your 30s, every dollar you earn matters. While you have to allocate for essential and discretionary expenses, do not forget to pay for the things and experiences you have on your goals.

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4. Tackle Those Debts

The more you postpone dealing with your debts, the more you will suffer and push back your plan of building wealth. Be a grown-up and start understanding the nature of your debts. Get rid of those high-interest debts such as credit cards.

Since not all debts can be paid off in just a few months, focus instead on minimizing the cost of the debts by refinancing. Such an option is good for vehicle loans and student loan debts. By eliminating your debts as soon as you can, you will be able to redirect your extra income to your goals.

5. Think of Retirement & Real Estate

One of the easiest ways to build wealth is by contributing to a workplace retirement plan, such as the 403b or 401k. But if your employer does not offer such, you can always opt to start an Individual Retirement Account (IRA) instead.

When you are in your 30s, you are much closer to your retirement age. That is why it is crucial during this decade of your life to save up or invest for retirement. Also, your 30s are the best time to think about real estate planning. Whether you like it or not, your life transitions during this time. You will take on new responsibilities and challenges.

Thus, it is high time during your 30s to think about your living arrangement. Should you continue renting? Should you buy a house? Should you sell the house you have inherited or move into it and handle the repairs? Whatever your choice is, it is crucial.

6. Embrace the Right Money Habits

Not every one of us is aware, but most of our money beliefs sprang directly or indirectly from our parents. As we start earning, spending, and saving money, we might have created habits that can be bad for our financial goals. To help us be aware of ourselves, here are some crucial things you need to put in mind:

Be a mindful spender. Before you splurge on new clothes or other items, ask yourself first if you need or want them. Evaluate as well whether you can afford such right now or not.

Pay yourself before you spend your earnings. One of the easiest ways to save is by automatically deducting your paycheck the amount you set for your financial goals.

Avoid lifestyle inflation. Since you are earning more this time, it is tempting to upgrade your lifestyle. But be wary. Living comfortably is not the same as living luxuriously. Still, be mindful of your purchases.

When building your wealth in your 30s, believing that you have the ability to become wealthy is just as important as taking proactive actions. By developing a millionaire mindset, you expand your understanding of finances.

Keep in mind the important components of building one’s wealth: build, increase your earnings, and diversify your sources of income. Live below your means and invest the rest.

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