Recently turned 30? Congratulations! You’re officially all grown up. So how much money do you have saved?
According to a survey conducted by DailyFinance, the average 30-something has around $12,000 in savings. While most people would like to have a decent amount saved by the time they’re 30, many—if not most—30-year-olds are still struggling to make ends meet. Although retirement may be a long ways off, the best way to plan for a better tomorrow is to start today.
Here are some tips to help you plan for a better, richer future.
Saving for Retirement
Many financial investors say that by 30 you should have at least one year’s worth of living expenses covered. However, this is a general term since different people require different living expenses. And while some financial experts may have you feeling downtrodden or unsure about how much you should have saved, don’t worry: There’s still plenty of time for you to make positive changes in your financial life and get yourself on the road to a secure future.
Plan According to Your Age, Income and Future
Experts say the best way to save for retirement is to save 15 percent of your yearly income. The idea is that as you get older, you (hypothetically) start making more money and can therefore save more each year. Ideally, you should be saving between 10-15 percent in your 20s and 15-25 percent in your 30s and so on. While this may look simple enough on paper, most 30-year-olds haven’t even begun to think about saving for retirement. That’s why it’s so important to start saving early.
No Right Answer for Everyone
The amount you should be saving depends on when and how you plan to retire. If you have aspirations of retiring to a palatial beach house in the Hamptons, you will obviously need to be saving a lot more than someone who wants to retire in a small cottage on a lake in the south. How much you need to save also depends on how long you think you will be working. There is no right answer that applies to everyone and every situation, so don’t let someone else’s sky-high ambitions make you feel inadequate.
Prioritizing Your Financial Needs
Most 30-somethings struggle to save for retirement, a house or other big-ticket purchases while simultaneously trying to crawl out from under a pile of student loan or credit card debt. If this sounds like you, here are a few tips to keep in mind:
- Take all matching funds. If your employer offers matching funds for 401(k)s, there is no reason at all to leave that match on the table. It’s like throwing away free money!
- Don’t forget your emergency fund. However, tempting it may be, savings earmarked for retirement shouldn’t be cashed out if your car breaks down or you become unemployed. Save a structured amount until you have six months’ worth of living expenses in your savings account.
- Get rid of the highest-interest debt first. It is the debt that is costing you the most, so put any extra payments you make towards that bill. Once it’s gone, move on to the next-highest interest rate.
Rather than worrying about how much you should have in your savings account, work on developing a savings plan and a budget for the future. Don’t focus on ‘being behind.’ Instead, forge ahead and make a solid plan based on your future and what you want out of it! For more financial tips, check out CreditGUARD’s money management resources.