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In your 20s, you learn. In your 30s, you build on what you’ve learned. In your 40s, you (hopefully) enjoy the fruits of the previous two decades. This applies equally to matters of the heart as well as the purse. The question is: just how much have you learned when it comes to managing your finances to put you on track for that next decade?
If you are about to hit the all-important three zero, check out our list of must-know money matters that every independent woman should live by.
1. Create a workable budget
Whether you create your budget using the latest app or the old fashioned way with pencil and pad, the operative word here is “workable.” That means that you make a budget and you stick to it. This involves knowing what funds you have coming in and having an air-tight plan of where and how they will be going out. You may feel like a slave to your budget in your early 20s, but by 30 you should know how to make that budget work for YOU.
2. Remember: temporary sacrifice, long term gain
Much like sticking to a diet that pays off when it’s time to flaunt your look at your high school reunion, by 30 you should understand that by forgoing that irresistible pair of stilettos, you will be standing taller financially down the road. Not sure whether you really need to make a certain purchase? Apply this old saying: “when in doubt, go without.”
3. Have a money review before you say “I do”
Love and marriage—they go together like a horse and carriage. But make sure you do a money review before you say “I do.” With the average age of marriage being 28 for American women, make sure you set financial boundaries with your significant other. This is more than just having a pre-nup. When things get serious and you decide to live together, make sure both parties are fairly sharing any outgoings and enjoying the benefits of incoming funds. If you don’t trust your rose-colored glasses, ask your financial advisor. He/she can give you a more neutral viewpoint.
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4. Calculate your net worth
At 30 you should be clear on what your net worth is. This isn’t just based on your cash, investments and assets. Take your total assets: what’s in your savings, investments, real estate, etc. Then you subtract your liabilities: loans, mortgage, etc. Calculating these things will give you a reality check as to where you stand financially.
5. Evaluate needs verses wants
A woman approaching 30 knows what she needs, but what’s not so easy to do is to separate her wants from her needs. Evaluating needs means establishing that all bases are covered before indulging in some well-deserved wants. Needs means shelter, food and utilities are paid.
6. Plan for emergencies by having an emergency liquid savings
You don’t want to sell off your shoe or jewelry collection to pay an urgent, unexpected bill, right? You need to be able to have $1,000 at a minimum in liquid savings set aside for emergencies. The fact of the matter is that emergencies WILL come. Why not be better prepared for them so they don’t become unnecessary mountains of debt?
7. Find the right life insurance policy
Our family situation tends to change as we hit the age of 30. It’s important to know that when it comes to Life insurance, it is not one size fits all. Does your life insurance suit your income? Does it suit the number of dependants you would leave behind should the unspeakable occur? Is term or whole life insurance better for my family? Honestly, you can’t afford NOT to have insurance.
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8. Open the right checking account
This is the financial science of being a woman of 30 — balancing a checkbook! While a checking account can help with keeping track on your money and expenditures, opening the right checking account should be done wisely.
9. Pay bills online and save time and money
Making use of technology when it comes to paying bills really can put you in the driver’s seat of bill management. Most banks offer the ability to pay your bills online for little to no cost. Phone apps and online services are making it easier to be responsible and cost effective.
10. Open an interest bearing savings account or money market
As a kid, having a piggy bank was exciting. It was cool to feel it get heavier and heavier as you put your coins in the slot. But consider having a piggy bank that only grew if you added to it. Your savings account is no different (unless it is an interest bearing savings account). Make sure you shop around for the best interest rate. Just make sure you check for any fees!
11. Avoid over-drafting your checking account
Accidentally over drafting your checking account can happen to the best of us. It should, however, NEVER be a lifestyle. By 30 you should have learned (hopefully not the hard way) one small overdraft can potentially cause a ripple effect of other financial disasters in your checking account. Fees for overdrafts are as high as $35 for each occurrence. Please don’t let this happen to you.
12. Start funding an IRA
What is an IRA? This stands for an Individual Retirement Account and the sooner you get started the better. Research the options available for you. Speak to your tax agent about the tax benefits associated with contributing to an IRA. There are so many reasons to start funding an IRA and tax benefits are just the beginning!
13. Educate yourself regularly with financial courses
There’s a wealth (pun intended) of resources available online. Immerse yourself in all things financial by doing things like taking time to talk to your local bank manager and reading the financial section of the news. It will all start to make sense eventually. By the age of 30, financially viable women know the jargon and are ready to start building on their primary level of financial literacy.
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14. Get out of debt
Debt is the kind of headache that keeps people awake at night. Sadly, it is also a major cause of anxiety and one of the leading causes of attempted suicides. By the age of 30, a woman knows that being in debt is simply no fun. It can hold you back. It stops you from moving forward and achieving new goals and dreams. If you do have debt, we strongly recommend that you work on devouring it ASAP.
15. Stay out of debt
If you aren’t in debt, you are doing well. This is about living within your means and sticking to your carefully constructed budget. To stay out of debt, avoid STDs. Yes, Stupid Transmitted Debts. Don’t agree to go guarantor on a loan for a boyfriend, friend or relative. This is a huge pitfall for women in their 20s. Don’t go there. Your financial health comes first. Delayed gratification is the motto of women who have mastered their money.
16. Stay away from payday advances from check cashing stores
Just say no. Such advances get you into the habit of being reckless with your money and using the advance as a bail-out. It might work just once. But if it becomes a habit and a way of life, you will become stuck in vicious cycle of robbing Peter to pay Paul, constantly playing catch-up. Try not to get caught in the Payday advance web; it’s not worth it.
17. Sallie Mae isn’t your sister; kick her out a soon as possible.
Defaulting on student loans is one of the primary reasons that young women have poor credit ratings. Use caution when applying or accepting a student loan. They’re easy to obtain but very hard to pay off. Too many women approaching 30 have unpaid student loans hanging over their heads.
18. Pull your credit and review annually
You have a woman’s health check once a year, don’t you? Women approaching 30 know the importance of mammograms and pap smears. Financial health is also important. Don’t bury your head in the sand. You can visit www.annualcreditreport.com and obtain a free credit report from all three credit bureaus. You have to know where you are in order to plan where you’re headed.
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19. Set up alerts to prevent identity theft
It is a sad reality but there are folks out there who are looking to steal your identity. When using Internet banking or the Internet period, make sure you choose a really strong password or pin that only YOU know. Never do banking on a public computer however if you really must, make sure you log out properly. Check with your bank to see what identity protection they offer. Some banks include basic insurance to cover unauthorized transactions. Set up alerts to send you an email should your accounts be accessed from an unusual location or device.
20. Create a Health Savings Account
Health is wealth. It pays to look after your health. Health can be a very unpredictable force in a woman’s life. It can also be very expensive. With a little foresight and planning, however, you can create a contingency plan for maintenance of good health by opening a Health Savings Account.
21. Save to purchase a home
Saving to purchase a home is a fantastic goal to have well before a woman turns 30. If you intend to apply for a mortgage, it helps if you have a sizeable down payment. Your goal should be to save between 3.5 percent to 20 percent depending on your type of loan. We recommend starting early with this saving goal.
22. Learn the pros and cons of renting versus buying a home
There is a common belief that rent money is dead money. This isn’t necessarily so. Renting has some financial benefits over paying a mortgage. For example, when renting, you are not responsible for property taxes, and financial upkeep of wear and tear on the property you are renting. If you can find a low cost rental property, you can use this as home base from which to work smart and save quickly so that you can eventually purchase that future dream home.
23. Find the best interest rates for loans
Loans, oh loans. It all depends on the type of loan, the duration of the loan and the interest you will be paying. Do your research in advance before signing on the dotted line. Ask questions about early repayment penalties. The earlier you pay it off, the better and the interest really won’t matter.
24. Understand the difference between simple interest verses compound interest
This bit of financial jargon is something that women well-versed in financial management understand well. Interest charged by a lender is basically a sum owed by the borrower for the privilege of being loaned the principal sum. In essence, it is profit for the lender. Simple interest and compound interest are two different ways of calculating interest and how it will be paid by the borrower. Simple interest is, just that: the sum charged simply on the principal amount. Compound interest is charged on the principal plus any interest accrued until the point of time at which interest is being calculated. In other words, it all adds up! Or does it? If not, speak to your financial advisor.
25. Understand your pay check and how to get the most of your money
When receiving your paycheck on Friday, it’s an exciting day. As exciting as it may be, you want to know your way around your paycheck and understand its various components. You should know about Social Security, Medicare and Federal income tax withholdings that are taken from each check. Make sure you speak to a tax professional to have the right amount of money withheld from each check so that you won’t have problems during tax filing season.
26. Negotiate your salary to fit your lifestyle
Most women have heard about the gender-based wage-gap. Is it fact or fiction? Well, it doesn’t matter. Statistically, men are much more assertive (read: aggressive) when it comes to making sure they are paid what they are worth. There is no reason why you can’t do the same. Play nice, but don’t be a pushover. Ask and ye (might) receive. Plan your pitch and believe in yourself. You can’t expect your boss to pay you more if you don’t value yourself.
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27. Give back—it pays off!
As they say, what goes around, comes around. Giving to charity can give you a feel-good buzz. Just make sure you get your tax receipt so come tax time, it can be added to your deductibles. Also, by 30 we have a better understanding of how giving back to the community creates a good reputation for us and opens up doorways to new business partnerships. Savvy networking begins at 30! In addition, green investment is all the rage right now; this means buying shares in ethical companies only. Keeping companies accountable pays off in so many ways. You are investing in your children’s financial and environmental future.
28. Understand your tax return and the benefit of deductions
The benefit of itemizing your deductions makes tax time an exciting time of year. There are many deductions you can claim on your taxes to decrease your liability based on your profession. You can visit www.irs.gov or visit your local tax professional for additional tax benefits.
29. Create a will—it’s important
When approaching 30, we are a little more realistic with understanding that death is a part of life. We are also clearer on who we love and what we would like to leave them once we leave the earth. While this is subject to change when we sashay into our 40s, we should at least ensure our Last Will and Testament is drafted and in good hands by the age of 30.
30. Lend to friends and family only what you can afford to GIVE
By the age of 30, you have likely experienced enough well-intended loans to friends who never paid you back. Only lend what you can afford to GIVE. Our advice: if you can’t afford to GIVE it, you can’t afford to LEND it. Don’t let money be the cause of the end of a relationship or friendship.
Now that you’ve had the opportunity to learn about these 30 simple money tips to know by the age of 30, it’s your time to put them in action. There’s no time like the present. It’s YOUR money, make it COUNT!
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