A Quick Recap
Hola, Money Mavens!
It’s great to be back with She’s a Full on Monet to discuss MONEY IN YOUR 30’S.
Last time we revealed the secrets of Money In Your 20’s. These are the foundations that you need, not only when you’re starting on your financial journey, but also if you need to play catch-up.
Let’s recap, shall we? To start your financial journey right, there are 4 essentials that you need.
1. An Emergency Fund — The rule of thumb is that you need to save 6 months of your total monthly expenses. Then if you’re furloughed from your job, you have a buffer to find a new job and not have to panic. I can’t stress the importance of this piece of your foundation. Not only for the savings part, but creating that good savings habit.
2. A Will — Yes, even if you’re young and just starting out, you need a will. A simple will can be drawn up with little to no out-of-pocket cost. Just make sure to have it notarized, sis! Then boom! You’ve checked this one off your list.
3. Disability Insurance — Most of the time you can score some great DI through your employee benefits with your job. Don’t skip this opportunity, friend! If you had a machine that made money (legally), and just churned away all day every day, you’d probably want to make sure that if something happened to that machine, then you could either fix it or get a new one, right? Well sis, you are that machine!
4. Life Insurance — Usually life insurance benefits are also available through your employee benefits at work. Don’t skip this step either. Take it from me, lovely. If you ever watched that show Monk, his catchphrase is “you’ll thank me later.” And guess what…you’ll thank me later.
Check, check, check & check. Foundation is complete.
Financial Planning In Your 30’s
So, moving on to our 30’s…Is it possible to be more adult? I don’t know, but here you are.
More adult. Congratulations!
What’s going on in your 30’s? Knee-deep in student debt repay, maybe you’ve started a family, searching for your career path that is satisfying, but also pays the bills, on track with your corporate job and leveling up. Do any of these sound familiar?
With your 20’s in the rearview mirror and the fundamentals done, you’ve now graduated to the next level of financial wellness.
The Foundation
If we’re still using the financial house model, we’re ready to build our framework. In this level, you have 3 tasks you will need to accomplish:
1. College Education Strategies
If you’ve started your family by now, this is one you’ll need to check off sooner than later. Will you plan on sending your child to college? Maybe you’ll promote a trade school, instead? Or entrepreneurship? You can save for your child’s future in a myriad of ways, but that will depend on the direction you’re planning for.
529’s are the most popular college savings products on the market right now. These are accounts that you can deposit funds into on behalf of your child (or your grandchild). Each state has a sponsored plan, i.e. Virginia uses American Funds, but you can choose any state’s plan, no matter where you live. **Hot Tip: While you can invest in any state sponsored 529 plan, you should know that if you choose your resident state’s plan, you might receive a tax deduction on your state taxes.
I wouldn’t use that as your only criteria, but it should be considered. 529’s are the most popular, but that doesn’t necessarily mean they’re the best choice for you. What if your child is not doing college? I have a client whose son is looking to be a pilot. Currently, getting your pilot’s license is not a qualified education expense with a 529. So, technically money can be withdrawn, but if its non-qualified, then they will owe taxes on the withdrawn funds.
2. Retirement Strategies
I always find this topic super interesting. Not only because it’s part of what I do for a living, but this is usually the first thing that financial people tell you to do. However, if you’ve been following along, it’s absolutely not the first thing. Now I will concede that the most popular retirement strategy, a 401k, is the Staples Easy Button. When you bag your first job, you will be able to participate in the company’s retirement plan. Don’t not take advantage of a savings opportunity, even if it’s a little out of order. So, click that easy button friend. **Hot Tip: Many employers also offer “a match” within their 401k plan. This is like free money, y’all! You should defer at least the minimum to get the full match.
3. Tax Strategies
You’ve probably been making money for a while now, and also paying taxes. So, now is the time to start looking at how taxes will affect your overall financial picture and how to plan for it. For what seems like forever, CPA’s and tax professionals have been suggesting that tax obligations will be less in our retirement years, since we’re supposedly not working full-time. However, in many cases this has proved to be far from the truth. For many reasons, like inheritances, working part-time, no tax deductions, etc, taxes have been higher in retirement than in working years. Planning for taxes in your Phase 2 (aka retirement) is imperative. Because let’s face it — I don’t think taxes will go down over the long term.
So, what are you going to do? Keep telling yourself that you’ll do it later? I’ll get to it when I make more money? I don’t make enough money to even think about saving? I can tell you what. You can’t afford to not take control of your money, right now!
It’s the Queen of Uncomfortable signing off for this round. See you next time when I’ll be chatting about Money In Your 40’s.
Missed Out On Part 1?
