How to save money in your 30s

Whether you’re starting a family or considering going back to school, being in your 30s comes with making big decisions that impact your financial life. It’s an important period in life to revisit budgets and invest in saving for the future.

It’s not an easy time to save money in general. Many adults’ finances were significantly hurt by the COVID-19 pandemic, yet still housing is becoming less affordable, and most economists predict that inflation will continue to surge. But these circumstances make it all the more crucial to develop habits that can help you stay afloat and to learn some strategies to navigate financial hurdles.

Here are some of the biggest financial steps to take in your 30s and some tips for making the most of them.

Revisit your budget

As life becomes more complicated, you’ll need to adjust your budget to account for new changes.

“Your budget will always be a reflection of your lifestyle at any point in your life,” says Ron Guay, founder of Rivermark Wealth Management.

Thirty-somethings likely have more financial responsibilities, such as mortgage payments and child care expenses. To factor these costs into a budget, it may become necessary to limit certain other expenses.

“For most people, it probably means less eating out, fewer concert tickets and more on things like housing and insurance,” Guay says. “It will be different for everyone, but you have to define your top priorities and remove expenditures that just aren’t as important as they used to be.”

Amending a budget doesn’t mean having no room for enjoying yourself, though. There are other areas where expenses can be limited, too, including grocery shopping. Buying in bulk and searching for cheaper, off-brand items are two ways to save on groceries. Also consider using a cash-back credit card or debit card to earn back some of what is spent.

Set specific goals

In your 30s, you’ll likely have a mix of short-term and long-term goals to save for, but regardless of the goal, it’s important to have a specific idea of what you want and to have savings priorities.

Some common goals 30-somethings may need to save for include:

• Buying a house
• Savings for kids’s futures, like an education fund
• Launching a business
• A move to a new city
• Retirement

Create a timeline for when each goal should be met, which can make the goal seem more tangible and incentivize you to make that timeline a reality. Try to factor in short-term savings goals, such as paying down student loans, while also putting money aside for long-term goals like retirement.

It may even be helpful to have separate savings accounts for different goals, such as one for an emergency savings fund and one for saving for a house or big move. Bankrate’s savings calculator can also help consumers determine how much to save for specific goals.

Make emergency savings a priority

Having an emergency savings fund ensures that you have a back-up solution when an unexpected expense comes up or if you face a loss of income.

Only 41 percent of millennials (those ages 26 to 41) had enough in savings to pay for a $1,000 surprise expense, according to a recent Bankrate survey. Inflation has also put a significant dent in consumers’ savings, with 54 percent of millennials saying that higher prices mean they have to set aside for emergency savings.

Not having an emergency fund can cause a huge hiccup if an unexpected expense comes up, like a roof leak or car repair. The U.S. health care system is also a significant burden on adults’ finances, with health-care costs averaging $5,177 — or 7 percent of the average household’s budget — in 2020. Plus, for those who are new parents, there’s the concern of having to pay medical bills if a child gets sick.

Aim to have an adequate savings cushion that can cover daily living expenses for at least six months — and it’s best to establish it before you take on a mortgage or purchase a new car, Guay says.

Continue to pay down debt

For many in their 30s, a significant chunk of their budgets probably goes toward paying debts, whether it’s credit cards, mortgage loans or student loans or all three. It’s important to continue to pay off these debts, so that the amount of interest they build up is limited, and you can pay less in the long term. Start by evaluating which loans need to be paid off

“Strategy No. 1 is to identify all your loans and have a deep understanding of what each loan is,” says Natalie Slagle, CFP, founding partner of Fyooz Financial Planning. “Understand what loan it is, what are the parameters and what payment plan you’re on.”

One of the largest sources of debt for 30-somethings is student loans. Student loan debt continues to grow at a rapid pace, with a 56 percent increase over 15 years — exceeding the rate of inflation. Pay at least the minimum monthly payment toward student loans, but don’t put all your money towards this debt at the expense of building savings, Slagle says.

“If you do have some surplus cash flow, attack the loan that has the higher interest rate to get that paid off,” she says. “There’s no reason to pay above the minimum when you could be paying that money elsewhere, like towards investment accounts or higher student loans.”

Start investing

With extra cash, you can start building an investment portfolio. There are a number of ways to invest, depending on your aversion to risk. Some low-risk investment options include high-yield savings accounts and government bonds. For those willing and able to take on more challenges, stocks are one high-risk investment option.

A good way to start investing in the future is to enroll in a retirement plan, either through an employer-sponsored 401(k) plan or a self-funded IRA. 401(k) plans are deducted directly from employees’ paychecks and are frequently matched up to a certain percentage by the company that sponsors the plan.

An IRA plan comes in two varieties: traditional and Roth. Traditional IRAs are tax-deductible, but they are taxed upon withdrawal. Funds in a traditional IRA can’t be accessed before age 59½ without incurring a fee. A Roth IRA isn’t tax deductible, but you also won’t have to pay taxes on it when you withdraw the funds, and withdrawals can be made at any time without a fee.

Still, prioritize building an emergency fund and meeting minimum loan payments before investing. Only invest once you’ve established a sturdy emergency fund and have surplus cash after paying down debt.

Advancing your career

Your 30s is an advantageous time to revisit career goals and make moves towards achieving greater career satisfaction.

“When you’re in your 30s, you have about a decade of professional work experience under your belt,” Slagle says. “Your 30s is the best time to take risks when it comes to your career, whether it’s establishing a business or trying to achieve that executive position that’s out of your reach.”

It may be tempting to settle into a job with decent pay even if it’s not what you want to do, but taking risks and seeking out roles where you have more decision power and confidence can lead to greater fulfillment. It also may be a good time to pursue a college or secondary degree in a desirable field. Those with a bachelor’s degree or higher had more than double the average income than those with only a high school education in 2020.

Whether you go back to school or start a new career, be sure to prepare financially in advance and have liquid funds available — funds that can easily be accessed if needed.

Taking on a risk means potentially starting anew with a lower income than before, Slagle says. “A savings strategy needs to be well-thought-out, and it needs to be a strategy where liquidity is the top priority.”

The bottom line

A lot of big changes happen to adults in their 30s — and current world events are making their financial lives even more challenging. It can be difficult to save up for a home or retirement, while also managing student loan burdens and inflated costs, but getting into the habit of saving strategies, like following a budget, can help create more financial security — now and in the future.

An ideal scenario for someone in their 30s doesn’t necessarily equal an exact amount in savings. “At the end of the day what matters is: are you on the right path? Everyone’s path is different,” Slagle says.

It’s more important to practice effective strategies and work toward your unique goals, she says. “You should have savings established and absolutely have a savings strategy in place.”