"There’s an unspoken universal understanding that 30 is when you should officially have your sh*t together. The dirty thirty is a huge milestone and turning point in adult life that (somehow) marks the end of youth and the beginning of middle adulthood. Partying until four a.m. doesn’t hold the same appeal it once did, and things like settling down, having kids, buying property, and retirement planning sound more enticing.
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That said, while 30 is still relatively young in the grand scheme of things, it’s also a great time to plan and save for retirement. So to help you get ready for a future of financial independence, I set out to answer one question: How much money should I have in savings by age 30?
How Much Money Should I Have Saved by 30?
According to Fidelity Investments, the general rule of thumb is that you should have at least the equivalent of your annual salary saved by 30. However, like all things in life, this rule is not one-size-fits-all, and personal finance is personal. We all have different expenses and obligations, opportunities and financial statuses, so for some people, this number might not be feasible.
So if you don’t have your annual income in savings or haven’t even started saving yet, don’t stress. The good news is that you can start now, regardless of where you are financially or if you’re already in your 30s. With these practical tips, you can build an emergency fund, pay down debt (goodbye, student loans!), and reach your long term financial goals. Keep scrolling to learn how to start saving at age 30 and beyond.
How To Start Saving
1. Create financial goals
You’re liable to make money mistakes if you don’t have something to work towards, so go ahead and set some financial goals for yourself. These goals can be anything you want, like saving up to buy a house, paying off debt, growing your investment portfolio, saving for retirement, and so on. Nothing’s too big or “unrealistic.” Having these concrete goals to work towards will make the next steps easier, and you’ll inadvertently be forced to make smarter money moves and save more.
2. Set short-term targets
Once you know what your financial goals are, you can then create short-term targets that help you reach them. For example, if you want to have $30K in savings a year from now, set up targets to grow your account by $2,500 each month. Having short-term targets will make your long term financial goals feel less overwhelming and also motivate you to make better financial decisions.
3. Build your emergency fund
By now, you probably know that having money you can cash in at a moment’s notice without penalties is vital. And this is especially true in your 30s because you likely have more responsibilities. So, prioritize building your emergency fund by optimizing your life for saving. Utilize one of the best savings apps, make changes to your budget, learn how to save money when you live paycheck to paycheck, and keep track of your income and expenses. Doing this will make contributing to your emergency fund a regular occurrence.
4. Get a high-yield savings account
Traditional savings accounts don’t earn a whole lot of interest, but high-yield ones do. And if you’re going to have an emergency fund, it might as well be in an account that lets you passively grow your wealth. So, let your money work overtime for you and get yourself a high-yield savings account. Check out our high-yield savings account breakdown for everything you need to know.
5. Contribute to a 401(k)
There’s a plethora of retirement plans out there, but a 401(k) is one of the best options for anyone who’s employed. With this employer-sponsored retirement plan, you decide how much to contribute out of your paycheck before income taxes are calculated, and more often than not, your employer matches your contributions. This is a great way to build your retirement portfolio with even the tiniest amount out of your paycheck. Talk to your employer to learn about your options and what you need to do to get started.
6. Create a Roth IRA
A Roth IRA is also a great choice for anyone who’s employed or self-employed because it’s an individual retirement account. With a Roth IRA, you contribute after-tax dollars and that money grows tax-free. At 59 ½, you can withdraw all earnings and contributions without paying fees or taxes. However, if you’re in a tight spot and need to liquidate some cash before then, you can withdraw any contributions you’ve made without penalties. So, if you’ve contributed $5,000 to your Roth IRA and your portfolio’s grown to $7,000, you can withdraw $5,000 tax and penalty-free–you cannot withdraw the $2,000 you made in earnings.
7. Pocket extra money
Receiving a raise or a large chunk of money from something like a tax-refund is exciting, and it’s natural to want to spend it when you’re caught up in that excitement. However, do yourself a favor and pocket that money now. When you zoom out, in the bigger picture, it’s probably not that much money, and down the line, you’ll be grateful that you chose to put it away and compound it.
8. Pay off high-interest debt
Not all debt is bad, but high-interest debt is something you don’t need in your life. With this kind of debt, most of your monthly payment goes toward the interest rather than the principal, so paying it off takes longer. Credit card debt has notoriously high interest, but student loans can also be offenders as well, so take a look at what you’re currently paying off to determine which has the highest interest rate. Then, make a plan to get rid of it. This could include making larger payments, securing a lower interest rate, or transferring the debt (to another account, different credit card, etc.) to lower the interest.
9. Be efficient with taxes
You naturally accumulate more responsibilities in your 30s (think: kids, a mortgage, and so on), and those responsibilities combined with a higher annual salary can make taxes even more complicated than they already are. The last thing you want is to accidentally miss something that could help you save big or get a way bigger refund, so consider consulting a trusted professional, like a CPA or financial advisor, to make sure you’re being as efficient as possible with your taxes.
10. Automate your savings
If you want to make your life easier, automating your savings is the way to go. With automated savings, a percentage of your paycheck is deposited into your savings account. So you won’t waste more time thinking about what to save or worrying if you’re spending too much. If you’re employed, talk to your employer about depositing a certain percentage of your paycheck directly into your savings account. If you’re self-employed or a freelancer, automatically deposit your earnings in your emergency fund or set up automated transfers from one account to another. And if you’re an entrepreneur, you can automatically contribute a percentage of your income into savings and funnel the rest back into your business account.
11. Save more as you earn more
It’s easy to spend more as you earn more, but falling victim to lifestyle creep can seriously hinder your finances. To combat this, make it a priority to save more as you earn more. This means automating more money into savings and investments, keeping expenses low, and ultimately living below your means. And just think: If you do this now, you’ll be able to make a bigger splurge purchase down the line.
12. Regularly check in on your finances
Checking in on your finances is so vital. And knowing where your money comes from and what it goes towards is part of being financially independent. Get in the habit of regularly checking in on your finances. This means reviewing expenses and automatic payments and looking at savings, investments, and debt. Do your due diligence and see if there are any areas you can cut back in and save (think: canceling subscriptions, finding lower rates elsewhere, etc.). Likewise, be sure to readjust your budget as needed. This may sound like a chore, but taking the time to do this will help optimize your money in the best way possible.
13. Use your money as a tool
When it comes down to it, money is a tool. And if you’re able to view and handle it like one, you’ll make smarter money moves. Be mindful of where you’re putting your money, and try to spend strategically. For example, if you have low-interest debt, don’t make paying it off your first priority. Instead, continue making monthly payments and focus on building your savings and retirement portfolios, and getting rid of high-interest debt.
14. Stay consistent
Consistency is key to everything in life, and finances are no exception. Admittedly, it’s easy to let savings plans and financial goals fall by the wayside—life gets busy, unexpected things pop up, plans change—but commit to yourself and your future by staying consistent. Make regular contributions to your emergency fund and retirement portfolios, pay off high-interest debt, and check in on your finances and adjust as needed. If you can do this, you’ll be golden, regardless of your current financial status or situation.