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7 tips for mastering money in your 30s

MLC Life Insurance

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Your 30s is a time in your life when life starts to get a little more serious. This is the time when statistically, you’re more likely to take on a mortgage to buy your first home, and have kids.

This new level of commitment often comes with new costs, too. Renovations, weddings and the obligatory honeymoon usually feature as key outgoings during this time of your life.

Your responsibilities, and the financial pressure on your bank account grow by the day. There’s day care, schooling, uniforms and endless groceries to purchase. These increased outgoings mean the money simply has to keep coming in, and you literally can’t afford major time off work through illness or injury.

Sure, your employer will give you sick leave days for the year to cover a short-term illness or injury, but this isn’t the case if you work for yourself. And if you were hit by something that required longer recovery time, your finances, and your life, would undoubtedly take a blow.

But there are steps you can take to navigate the precarious tightrope of life in your 30s to ensure you have some basic safety nets and plans in place to handle this stage of life.

1. Know your budget

Your income might rise in your 30s, but the expenses will rise too. It’s paramount you are completely across the day-to-day reality of your financial commitments and that you’re putting cash aside for tomorrow.

If you’re planning a wedding, bear in mind that the average wedding in Australia will set you back $36,200, with 50% of Australians taking out a loan to cover the costs, according to the Australian Securities and Investment Commission's MoneySmart website.

If you haven’t created a household plan and budget before, jump on the MoneySmart site and check out the budget planner, which is a great tool for full visibility of your commitments.

2. Build an emergency fund

Being in your 30s means you’re no doubt wanting to be a little more financially responsible.

Set up a savings fund specifically for an unplanned event, which could range from time in hospital, loss of a job, to replacing a hot water cylinder, car expenses or any other unplanned expenses. Aim to have at least six months’ expenses set aside in your emergency fund.

3. Top up your super

Building your nest egg takes a lifetime of persistence. After all, employer contributions alone might not be enough to fund your retirement, particularly if you’ve had breaks from the workforce, started working later due to study commitments or you’re looking forward to a better retirement lifestyle.

You might have taken the obvious steps, such as checking if you’re eligible for government co-contributions or putting your annual tax returns into super, but there are other ways to boost your retirement savings stash. You can add your information into the MoneySmart superannuation calculator here to see if you’re on track.

4. Reduce your credit card debt

In the financial world, there’s good debt and bad debt. Good debt is a purchase that will increase in value over time, such as a house. Bad debt, on the other hand, will fall in value over time, such as a personal loan for a holiday, or credit card debt.

It’s so important to clear that credit card debt you’ve carried around with you since your 20s to get ahead in life.

Collectively, we owe a staggering $45.2 billion on credit cards as a nation, recent Reserve Bank of Australia data reveals, but the interest we pay can be crippling.

Also, go through the statements with a fine tooth comb and actually analyse your spending habits. Look for bad financial habits that you could break to save money, like regular trips to the café for that morning caffeine hit. A $5 coffee five days a week adds up to $1,300 over a year.

5. Consider investing

Being in your 30s is a time to think about investing in riskier investment options, because you’ve still got time on your side to ride out any short-term volatility. Riskier investments may ultimately yield higher returns over the long term, after all.

As the MoneySmart website explains, higher risk investments, such as shares or property, have the potential for higher returns over the long term, but also a greater risk of falling in value. This could result in a loss known as a negative return. Investments with a lower risk include cash and fixed interest, which are safer, but also offer lower returns.

6. Make sure you’re properly insured 

This is the time in your life when you start to realise how important having the right insurance policy really is.

You may well have life insurance wrapped in your super, usually through arrangements at work, but does it give you enough cover? Statistics show that the answer is probably not. Research reveals that the median level of life cover will provide just 38% of the amount needed to maintain a family’s standard of living after the death of a partner or parent.

So take the time to find out how much life insurance you need. The exact amount of cover you need depends on your circumstances but, as a guide, in your 30s it’s recommended you have at least $1m-$1.5 million of cover.

Check out your Total Permanent Disability and salary continuation cover, which you may have within your super fund. Studies show that the median cover only meets 13% of the TPD needs and 17% of income replacement needs meaning that while it’s better than nothing, it may not meet your financial obligations if you do fall seriously ill or are injured and unable to work.

7. Consider seeking financial advice

Sometimes dealing with the world of investments and insurance can be overwhelming, and it can be hard to know what to do. That’s where a trusted adviser can help explain what it all means. They can also help you consider options that are right for your circumstances and budget.

Before investing or taking out insurance consider seeking advice from an adviser with the skills and expertise in the area’s that you need advice on. Check on the financial advisers register published by MoneySmart.  

MLC Limited operates the MLC Life Insurance business. MLC Limited uses the MLC brand under licence. MLC Limited is part of the Nippon Life Insurance Group and not a part of the NAB Group of Companies.