How to Build Wealth in Your 30s

When you hit your 30s, it’s time to start building wealth and getting serious about money. Getting your finances in order can include everything from ramping up retirement savings to tackling debt and credit issues. We’ve compiled the best tips to help you get on track financially to begin building wealth in your 30s and beyond.

Consider consulting a financial advisor to develop a long-term financial plan that aligns with your personal goals.

How to Build Wealth in Your 30s

1. Revamp Your Budget

Are you still using the same budget you had when you were a twenty-something, eating ramen in a tiny apartment? If so, it’s probably time to consider making a new budget.

By now, your income and expenses have likely increased, and you’re likely more serious about saving money. All of these changes mean you need to adjust your budget. You may not have to drastically cut costs, but it is still important to determine how to lower your cost of living so you can save your extra disposable income.

Focus on creating a responsible and realistic budget, and stick to it.

2. Increase Your Retirement Savings

Let’s face it, no one stays 30 forever.

It’s time to start thinking seriously about your retirement, especially if you haven’t already. Starting your retirement planning now can help you feel less pressure once you hit your 40s. Think about how much money you will need in retirement so you can create your retirement income goal. Using a retirement calculator can help simplify this process.

One step you can take immediately is to boost your retirement savings to at least 15% of your income. If you’re able, consider maxing out your 401(k) contributions.

You may also want to adjust your contribution amount every time you get a raise. These contributions are pre-tax and thus lower your taxable income. Therefore, increasing your contribution amount won’t cut into your take-home pay as much as you may expect.

Your 401(k) isn’t the only opportunity for tax-advantaged retirement savings. Opening an IRA, or increasing your contributions to an existing one, will also help grow your retirement savings. A traditional IRA will get you a nice tax deduction. However, forward-thinking savers may opt for the tax-free growth of a Roth IRA.

Just be mindful of annual IRA contribution limits and 401(k) contribution limits.

3. Boost Your Emergency Fund

In addition to looking ahead to retirement, you must also prepare for the unexpected.

Be sure to open an emergency fund account if you don’t already have one. That way, you will be protected in the event of an accident or job loss. Keep at least three to six months’ worth of living expenses in the account. Then, as your income increases, increase your contributions.

You can stash your emergency savings in any account of your choice. It’s probably best, though, to choose a liquid account, such as a savings account or money market account. While your money won’t grow as quickly as it would in an investment account or a CD, it’s best not to keep your rainy-day fund in an account that’s exposed to market risk or that carries penalties for early withdrawal.

4. Make Smarter Investment Choices

If you haven’t started investing yet, there’s still time. In your 30s, you’re still young and far enough from retirement that you can still afford some portfolio risk. This may mean investing heavily in stocks.

If you’re not a market wizard, mutual funds and ETFs are great investments because they’re ready-made, diversified baskets of professionally-managed securities. You can also invest in index funds. These have lower costs and tend to beat managed funds over the long haul. You can even begin investing more passively with a robo-advisor that will pick investments and funds for you.

The bottom line is that whether you’re just getting started or you’ve been investing for years, it is important to ensure your investment portfolio reflects where you are in life. In your early 30s, it’s fine to stay heavily in stocks. However, you may want to consider adding bonds and other safer investments as you get closer to retirement. Investing in a target-date fund can also be beneficial, as it automatically rebalances as you get older.

5. Get Rid of Existing Debt

The sooner you pay off your debts, like those pesky student loans, the more you can save for your future. Stick to any debt repayment plans you may have, and ramp up repayment in any way you can. For example, consider putting that big end-of-year bonus toward your student loans. This will help pay down the principal while reducing the interest you pay.

If it’s credit card debt looming over your head, consider making extra payments towards those with the highest interest rates. A balance transfer card may help, as these sometimes offer an introductory zero-interest period that effectively pauses your interest payments.

As you pay off debt, be mindful of your current credit card spending. It won’t do you any good to pay off those debts if you’re racking up more charges. With credit card interest rates often falling into the mid-20% APY range ¹ , it’s best to pay off your bill in full every month.

Also, keep in mind that it is best to keep your credit card utilization under 30% of your available credit limit.

6. Take Advantage of Your Employer’s Benefit Offerings

Many people in their 20s fail to take advantage of the numerous programs and benefits that their employer offers. This is a great way to save money, as your employer will either pay for some of your everyday purchases or they have discounts to help.

These are some of the common employer benefits that companies today offer.

• Matching 401(k) contributions. Younger people often neglect to take advantage of company matching. However, this can be an excellent tool when saving for retirement. Sometimes your employer will offer to match what you put into the plan, up to a certain amount. This represents free money for you. Start saving early to maximize your retirement potential and spending power later.
• Commuter benefits. Your employer may pay for your commute to work or they may offer a monthly stipend. However, you typically have to request this support in order to receive it. 
• Store discounts. Many employers offer discounts for their employees because they belong to networks or are offered savings through their benefits vendor. You can benefits from savings or rewards every time you use these discounts, so take advantage where you can.
• Flexible Savings Account or Health Savings Account. A Flexible Savings Account (FSA) or Health Savings Account (HSA) can provide pre-tax dollars for medical expenses you will purchase anyway. It’s a great way to save some tax money to pay for your health.
• Legal insurance. This is sometimes a free option for employees and provides protection against unforeseen legal expenses.

How a Financial Advisor Can Help You Build Wealth in Your 30s

A financial advisor can help you build wealth in several ways.

Balancing Financial Demands

In your 30s, income typically begins to grow meaningfully, but so do your financial demands. Mortgage payments, childcare, student loan repayment and retirement savings all compete for the same dollars simultaneously.

A financial advisor can help you build a structure that addresses each of those obligations in the right order. This helps ensure that short-term pressures do not come at the expense of long-term wealth building.

Investments

Investing consistently through your 30s produces compounding returns that are difficult to replicate later.

A financial advisor can determine the best allocation between retirement accounts, taxable brokerage accounts and other investment types based on your income, tax situation and timeline. Even modest monthly contributions to low-cost diversified funds throughout your 30s can produce portfolio values by retirement that dwarf what is achievable by starting a decade later.

Debt Management

Debt management is one of the most consequential wealth-building decisions you will make in your 30s. Carrying high-interest debt while simultaneously trying to invest creates a drag on net worth. This slows progress, regardless of how well your investments perform.

A financial advisor can help you determine the right balance between accelerating debt repayment and maintaining investment contributions. They can also help with tax deductibility and your specific financial goals.

Income Growth

Income growth in your 30s creates opportunities that did not exist earlier. This includes the ability to max out retirement accounts, build a taxable investment portfolio and begin more sophisticated tax planning.

A financial advisor can help you capture those opportunities systematically. This helps prevent lifestyle inflation from absorbing income increases before they contribute to wealth. Investing raises and bonuses instead of spending is one of the most effective wealth-building behaviors to establish during this decade.

Real Estate

Real estate is a wealth-building tool that many people in their 30s begin to consider seriously. This may be through a primary residence, a rental property or both.

A financial advisor can help you evaluate whether buying makes financial sense in your specific market. If so, they can help calculate how much of your net worth should go to real estate versus financial assets. They will also ensure the timing aligns with your broader plan.

This analysis prevents one of the most common mistakes people make in their 30s – over-allocating to real estate at the expense of a diversified investment portfolio.

Safeguards

Protection is a dimension of wealth building that is easy to overlook when the focus is on accumulation. Life insurance, disability coverage and an adequate emergency fund are not investments in the traditional sense, but their absence can erase years of financial progress in a single event.

A financial advisor can assess whether your current coverage is sufficient given your income, dependents and debt obligations, while ensuring that the wealth you build in your 30s is protected against any risks that may derail it.

Bottom Line

Being smart about your budget, savings, investments and credit can go a long way toward growing wealth in your 30s. There are plenty of steps you can take right now to ensure financial security later in life. From setting up an estate plan to making your budget work better for your long-term finances, take the right steps now so you can hit your short- and long-term financial goals.

Tips on Saving for Retirement

• Need some extra help adjusting your budget and rebalancing your portfolio? A financial advisor can offer professional and personalized help in all aspects of your finances. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• By your early 30s, you should already have some savings stashed away for retirement. It’s not too late to get started if you don’t. While everyone’s situation is different, it may help to see what average retirement savings look like to see where you stand.
• Of course, what’s truly important is making sure your savings are on pace to meet your eventual retirement income needs. Use SmartAsset’s retirement calculator to get a sense for what sort of income you’ll need in retirement, and how much you need to increase your savings to get there.

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