9 Financial Planning Steps to Take in Your 30s

How to create a financial plan

Financial Planning for the 30 year old

A good friend of mine once told me that financial planning in your 30s is just like financial planning in your 20s, except that you have money!

For many, in addition to having money, your thirties bring with them additional responsibilities; a spouse, children, your first “real” promotion or “real” responsibility at work. These and other adult responsibilities dictate an intensified need to get your financial planning on the right track!

Your thirties are the time to quit being irresponsible, quit being lazy, quit wasting money and begin taking your financial planning seriously.

What steps should you consider? What steps should you consider taking to put yourself on a path to financial freedom (however it is you define freedom)?

Here is my list of the 8 Steps every thirty-something should address by the time they reach 40 years old:

1 – Rid Yourself of Bad Debt

I hate debt.  More specifically, I hate bad debt.  Debt from credit cards.  Even worse, debt from multiple credit cards.  It makes my skin crawl.  Other bad debt could include things like school loans and car loans.

While it is true that some of these loans may be at low (or zero) interest rates and some of them may provide a tax benefit, they are still money owed to someone else. Debt is a drag on cash flow – cash flow that could otherwise be saved and/or invested. The feeling of ridding yourself of the crappy debt is the equivalent of lifting a 100 lb weight off your back.

As a financial advisor, I love eliminating this debt and freeing up cash flow. This newly found free cash flow can empower you to make financial decisions that may positively impact your financial future.

Paying off debt gives you control of your money and helps start you on the path to financial success.

2 – Seriously Consider Retirement, Often for the First Time

As your 30s come to an end, a real consideration of retirement has likely crossed your mind. If it hasn’t, it should!

Am I contributing to my 401(k)?  Can I contribute more?  Should I have a ROTH IRA or a Traditional IRA?  How much do I need to save?  Am I saving enough?  What else can I be doing to save for retirement?

Your 30s are a time to calculate how much you are saving annually, how much you have saved already, and how much you need to save in order to help meet your retirement goal. While twenty years or more of working is still a considerably long time, it often takes 20 years (and frequently more) to save enough to retire (unless, of course, you plan on winning the lottery).

A good retirement plan at this age will often assist in  the success of your existing financial plan and offer recommendations on how to help improve your plan.

3 – Be Honest About Your Saving and Spending

Are you saving enough?  Are you saving at all?  Are you contributing to retirement?  Or are you accumulating debt? Do you have an active savings plan?

For most, the honest answers to these questions are kept private. The honest answer is one we often don’t want to answer ourselves, because if we are honest, we might not get a passing grade.

Our poor grade is because our twenty-something lifestyles never required us to pay attention to the details. We had a job, covered our expenses, and made ends meet. We never had to seriously consider the future.

The trouble arises when the bad spending habits of our responsibility-free twenties creep into, and subsequently dictate, our thirties. These are bad spending habits that may impact our thirty-something responsibilities.

Answering, “I don’t know where my money is going” is no longer good enough. Sometime during your thirties you should become aware of how much you are spending, how much you are saving, and where your dollars are going.

It’s called budgeting, and it’s really boring…  But it’s super important!

4 – Get Adequately Insured

The more you have to lose, the more important having adequate insurance becomes. It’s often sometime during your thirties that you realize you have a lot to lose.

What if you lost your ability to work and provide an income for the family? Even worse, what if you died? Do you have the requisite disability insurance and life insurance to allow your family to make ends meet?

An adequately insured person will have both disability insurance and life insurance (as a rule of thumb, I prefer personal policies and term insurance. But I also hate rules of thumb, so take it for what it’s worth).

What about the other insurance needs – health insurance, car insurance, homeowners’ insurance? These insurance needs should be addressed in an effort to adequately shift risk.  If you don’t take the time you may leave yourself at risk of “being unlucky.”

5 – Address Other Financial Planning Needs

Your thirties may be a time when you begin to have disposable income; income that is above and beyond what you need to meet all of your expenses. It’s not uncommon for thirty-somethings to be offered compensation packages that include some form of employer stock; employee stock purchase programs, restricted stock, stock options (both nonqualified and incentive stock options), and/or phantom stock.

These types of stock plans warrant advanced planning needs, analysis, and strategy. While full control and final decision making may not become available for many years, it’s important to lay the foundation for a plan that helps meets the dual mandate of maximizing after-tax profitability within a stated risk tolerance and objective.

It’s not uncommon that sometime, during your thirties, things will become a bit more complicated than the do-it-yourself model that may have worked until now.

6 – Establish a College Savings Plan

If you have kids, it’s so important to start saving for college.  Early and often should be your mantra.

A 529 College Savings Plan is one easy way to save. You establish an account. You contribute regularly. You invest typically in mutual funds. Your investment can grow tax deferred and if used for a qualified higher education expense, the growth is tax free.

Bottom line: college is expensive. Just like saving for retirement, you should consider committing to saving early and saving often.  The money you accumulate may open opportunities that otherwise may be closed. It’s too important to overlook and too important to put off until another day.

7 – Consolidate Your Life

It’s time, during your thirties, to take stock of what you have, what you need, and what overlap or exposures exist. It’s not uncommon to have left an old 401(k) behind, purchased a life insurance policy you may not have needed, or forgotten to update your P/C insurance coverages.

A good audit of your financial plan should list everything you have. From this list, you can pick and prune what to keep and what to eliminate. The single biggest benefit of an audit is seeing what you have, in a detailed and laid-out document. I am constantly amazed by how many soon-to-be-retirees do this for the very first time.

8 – Consider Your House a Home, Not an Investment

By the time your thirties come to an end, it’s not uncommon to have owned a home (or two). A home is a great thing to have; a place to live and a place to raise a family. Home ownership is still the American Dream!

Somewhere along the line our society has been tricked into believing your home is an investment. We all (myself included!) love sharing how much equity we have in our home, how much the value has grown since we purchased it, and how good a decision it was to buy.

In your thirties, it’s good to commit to the fact that your home is not an investment (if you make money, great! But that is not the main point). It’s not an extension of credit. The more fiscally responsible you are with your home during your thirties, the more financial freedom you may have in retirement.

My best advice is…your home, more than anything, is just that: A home and a place to live! Think of it that way.

9 – Draw up an Estate Plan

If you have amassed some level of assets or have started a family (often one or both of which occur during your 30s), you should consider drawing up an estate plan.

Who is going to care for your kids should something happen to their parents? Where is the money going to go?  Have you updated your beneficiaries lately?

Other more complicated issues that may need addressing include the estate planning implications of a second marriage, a divorce, or special needs planning for children.

A simple estate plan is something that every thirty-something should seriously consider.

What Now

Your thirties are about getting real with regard to your finances, often for the first time. You’re making real money, you have a real family, and you have real responsibility.

Now is the time to engage in real decision making that addresses your short-, medium- and long-term goals as they pertain to your financial and personal future.


Participation in a 529 College Savings Plan (529 Plan) does not guarantee that contributions and investment return on contributions, if any, will be adequate to cover future tuition and other higher education expenses or that a beneficiary will be admitted to or permitted to continue to attend an institution of higher education.  Contributors to the program assume all investment risk, including potential loss of principal and liability for penalties such as those levied for non-educational withdrawals.  Depending upon the laws of the home state of the customer or designated beneficiary, favorable state tax treatment or other benefits offered by such home state for investing in 529 college savings plans may be available only if the customer invests in the home state’s 529 college savings plan.  Consult with your financial, tax or other adviser to learn more about how state-based benefits (including any limitations) would apply to your specific circumstances. You may also wish to contact your home state or any other 529 college savings plan to learn more about the features, benefits and limitations of that state’s 529 college savings plan.  For more complete information, including a description of fees, expenses and risks, see the offering statement or program description.

None of the information in this document should be considered tax or legal advice.  You should consult your tax or legal advisor for information concerning your individual situation.

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