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How to Build Wealth in Your 30s

Perhaps you lived your 20s without a care in the world. But once you reach your 30s, it’s time to start building wealth and getting serious about money. That can including everything from ramping up your retirement saving and planning to grappling with your debt and credit issues. Following these tips can help you get on track with your finances and build wealth in your 30s.

1. Revamp Your Budget

Are you still using the same budget you made when you were a twenty-something eating ramen and living in a tiny apartment? Then it’s probably time to give it another look. Your income and expenses have both likely gone up, and you’re hopefully getting even more serious about saving money. All of these changes will mean adjustments to your budget.

Perhaps you’ve moved into a much nicer apartment, with a full kitchen, and you’ve figured out you can actually cook. Not only will that apartment take more out of your budget, but so will the money needed for groceries.

These increased expenses may mean you have to cut costs elsewhere. But those cuts may be easier than you think. Maybe you’re not going out as much in your 30s, or you’ve cut back on clothes shopping. Maybe, too, you’ve finally finished paying off your student loans, freeing up money that had been going to those monthly payments. In all cases, you can pare down or eliminate these line items in your budget to make more room for what’s gotten pricier.

Of course, you’re hopefully also making more money in your 20s. In that case, you’ll still need to adjust your budget, but you might not have to drastically cut costs across the board. Focus on making a responsible and realistic budget for yourself to follow.

Having more disposable income also means a little more wiggle room for saving money, for goals both short- and long-term.

2. Increase Your Retirement Savings

Let’s face it, no one stays 30 forever. It’s time to start thinking seriously about your retirement if you haven’t already. Think about how much money you expect to live on each year in retirement, and how much you’ll need to hit the retirement income goal. (Hint: Using a retirement calculator can make this process a little easier.) Starting your retirement planning now can help you feel less pressure once you hit your 40s.

One step you can take immediately is to boost your retirement savings to at least 15% of your income. Of course, not everyone in their 30s will have the financial means to set aside that much. But if you’re able to do so, definitely consider adjusting your 401(k) contribution upwards. At the bare minimum, you should be taking advantage of your employer’s 401(k) match program, if available, as that’s effectively free money. You may also want to adjust your contribution amount every time you get a raise if it’s not automatic. Since these contributions are pre-tax – and thus lower your taxable income – an increase to your contribution amount won’t cut into your take-home pay as much as you might 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 charge up your retirement savings. A traditional IRA will get you a nice tax deduction, but forward-thinking savers might opt for the tax-free growth of a Roth IRA. Just be mindful of yearly IRA contribution limits and 401(k) contribution limits.

3. Boost Your Emergency Fund

How to Build Wealth in Your 30s

In addition to looking ahead to retirement, you must also be more prepared for the unexpected. Open an emergency fund account if you don’t already have one. That way, you won’t find yourself completely broke in the event of an accident or job loss. You’ll want to keep at least three to six months’ worth of living expenses in the account. Again, as your income increases, you should also increase your contributions to this account.

You can stash your emergency savings in any account of your choice. It’s probably best, though, to choose a liquid account like 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. Invest Smarter

If you haven’t started investing yet, there’s still time. In your 30s, you’re still young and (relatively) far enough from retirement where you can still take on some risk in your portfolio. This means investing heavily in stocks.

Mutual funds and ETFs are great investments if you’re not a market wizard; they’re ready-made, diversified baskets of professionally managed securities. You can even start investing in a more passive way with a robo-advisor, which will pick investments and funds for you. And you can also invest in index funds, which have lower costs and tend to beat managed funds over the long haul.

But whether you’re just getting started or you’ve been investing for years now, you need to make sure your investment portfolio reflects where you’re at in life. In your early 30s it’s fine to stay heavily in stocks, but you might consider mixing in some bonds and other safer investments as you get older and closer to retirement. (Note: If you’re invested in a target-date fund, that rebalancing will happen automatically as you get older.)

5. Get Rid of Existing Debt & Monitor Your Credit

The sooner you pay off your debts, like those pesky student loans, the better you can focus on saving towards your future. Stick to any debt-repayment plans you might have made. Even better, ramp up your repayment in any way you can if you’re able to. For example, you can put that big end-of-year bonus toward your student loans to pay down the principal and decrease what you owe in interest.

If it’s credit card debt you’ve got looming over your head, it may help to start by making extra payments towards those with the highest interest rates. You might also consider a balance-transfer card, some of which have an introductory zero-interest offer that effectively puts a pause on your interest payments.

As you pay off debt, be mindful about 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, it’s best to pay off your bill in full every month. Also keep in mind that it looks best to potential lenders if you use less than 30% of your available credit limit.

Yes, your credit score is more important than ever, especially with a mortgage potentially on the horizon. Be sure to check your credit report yearly, which you can do easily at for free. Since you can receive one free report from each of the three credit bureaus each year, it can be really helpful to space out your requests throughout each year. That way, you can keep a constant eye on your report for any mistakes or blemishes. And when it comes time to buy a home, your credit report will be in tip-top shape to get the best mortgage rate.

The Final Word

How to Build Wealth in Your 30s

Being smart about your budget, your savings, your investments, and your credit can go a long way toward growing wealth in your 30s and beyond. And while you’re at it, there are other steps you can take to ensure your financial security. For one, you can adjust your insurance coverage as your assets grow, protecting against everything from natural disasters to long-term disability. If you’ve started a family, it may also be beneficial to put together an estate plane in your 30s and get a life insurance policy. And as your taxes grow more complex, consider working with an account or financial advisor who can help with short- and long-term tax planning.

Tips on Saving for Retirement

  • 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.
  • 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. The right advisor is just a few questions away, through our financial advisor matching tool. We’ll connect you with qualified advisors in your area to get you started right away.

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Lauren Perez, CEPF® Lauren Perez writes on a variety of personal finance topics for SmartAsset, with a special expertise in savings, banking and credit cards. She is a Certified Educator in Personal Finance® (CEPF®) and a member of the Society for Advancing Business Editing and Writing. Lauren has a degree in English from the University of Rochester where she focused on Language, Media and Communications. She is originally from Los Angeles. While prone to the occasional shopping spree, Lauren has been aware of the importance of money management and savings since she was young. Lauren loves being able to make credit card and retirement account recommendations to friends and family based on the hours of research she completes at SmartAsset.
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