Financial Planning by Decade: Your 30s — Spouses and Houses, and Kids, Oh My!

As a wealth management firm, Balentine is committed to providing peace of mind and simplicity to clients of all ages. In this series, we tackle some of the most common issues faced in each decade. Please talk to a Balentine Relationship Manager if you have additional questions about financial planning—regardless of age.

Your twenties were a time of major life changes—you may have graduated college, moved to a new city, secured your first full-time job, started graduate school, etc. Just when you became accustomed to your new lifestyle, bam! Your thirties happen. What may have once seemed lightyears away is your new reality—you may be getting married, purchasing your first home, having children, etc. What a difference a decade makes.

Hopefully, you began cultivating healthy financial habits in your twenties, but if not, don’t despair; it’s never too late. Whether you’re looking for advice on how to adapt to the new financial circumstances of your thirties, or starting from scratch, there are a number of actions that you can take to enhance your financial outlook.

  1. Revisit your budget and emergency fund. The old adage “set it and forget it” doesn’t cut it when it comes to budgets and emergency funds. Your budget should be reviewed at least once a year, and especially whenever your personal or financial situation changes. Don’t let “sleeper costs” sneak up on your budget. Buying your first home? Remember to factor in property taxes, homeowner’s insurance, HOA fees, maintenance, etc. Having a child? Don’t forget to plan for hospital costs and childcare. According to Credio, North Carolina is the eleventh most expensive state for childcare costs. While the same study ranks Georgia #33, urban areas such as metro Atlanta tend to be much more expensive than the statewide average. It’s also good practice to review your emergency fund alongside your budget. Continuing the previous example, your monthly expenses will increase with the addition of a child, and your emergency fund should reflect that.
  2. Create an estate plan. If something were to happen to you or your spouse, would you want the state to make important decisions about the dispersion of your assets or the care of your child(ren)? Then you should do everything possible to protect both your family and your assets. Key components of an estate plan include a will, power of attorney, and advanced medical directives. At minimum, you should have an updated will that includes who will get which of your assets upon your death, who will manage and settle your estate, and who will gain guardianship of your minor children or dependents with special needs. Even if you do not yet have dependents or a spouse, the only guaranteed way to ensure that your assets go to the person or people intended is to write a will; otherwise, the laws of your state determine the inheritors.
  3. Purchase appropriate insurance. If the unthinkable did happen, how long would your 401(k) provide for your family? If the answer is “not long enough,” then it might be a good time to consider increasing your insurance coverage. In addition to heath insurance, disability insurance and life insurance can provide peace of mind. Life insurance can be used for more than just funeral expenses and income for survivors; additional benefits include paying for college, estate taxes, mortgages, and other debts. You might also still be working to pay off student loans. If any of them are private loans, then your co-signer(s) would be held responsible for the remaining debt, since—unlike federal student loans—they are not discharged upon death. According to the Council for Disability Awareness, just over one-in-four of today’s 20 year olds will become disabled before they retire. What’s at stake? This Personal Disability Quotient calculates your odds of an injury or illness that could force you to miss work for an extended period of time and how it could affect your earning potential. If you rely on your income to maintain your standard of living, then your ability to earn an income is your most valuable resource—insure it.
  4. Invest Outside of your 401(k). If you took the mantra “pay yourself first” seriously in your twenties then you are aggressively saving toward your retirement. Now you should begin building wealth outside of your retirement portfolio. If you want to go it alone, the Securities and Exchange Commission (SEC) has a Beginners Guide to Investing that provides a high-level overview of the process. However, we highly recommend that you seek advice from an investment professional, regardless of how much you know about investing. As Carl Richards explains in The One Page Financial Plan, most financial decisions come with emotional baggage that can cause emotional blind spots. It can be very difficult to identify, let alone overcome, those blind spots. Don’t risk making a rash investment decision; instead, get an objective Registered Investment Advisor (RIA) to help you stay disciplined and on track. Why an RIA? They’re held to a fiduciary standard of care, meaning that they are legally required to always act in their client’s best interests.
  5. Start saving for college. While you may still be paying off your own student debt loans, those little ones of yours won’t stay that way forever, and it’s never too soon to begin saving for their education. Not sure how much you need to save? Use College Board’s College Cost Calculator to determine how much college will cost by the time your child enrolls. The figure it gives you may seem a bit daunting, but the good news is that there are more college savings options available now than ever before. One of the most popular is a Section 529 plan, a state-sponsored investment plan that will allow you to save for college tax-free.

Your thirties are a time of great transition and excitement; with that, though, comes ever-increasing responsibility. Make sure to regularly set time aside to plan for current and future financial needs—you’re no longer the only person depending on it.

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