In your thirties, you are entering a time of new and exciting life experiences. Your financial success and decisions begin to affect not just yourself but your loved ones as well.
While everyone's timeline looks a little different, for most, it is typical that in your thirties, you are making progress in your career and could be settling down with a partner. You may have thoughts of purchasing a home or currently live in a house.
Your thirties is the time you may be considering starting or growing your family. You may need guidance in financially preparing for these new life experiences.
In this blog, Park City Wealth Advisors will introduce tips for managing your finances in your thirties to secure long-term financial stability for yourself and your loved ones.
Establish a Solid Foundation for Financial Success
Your thirties are typically a time to start considering your financial legacy and how you will impact your family and loved ones. However, It is crucial to first establish a solid financial foundation for yourself before thinking of others.
A solid financial foundation for yourself includes striving to max out your 401k each year. As of 2023, the maximum 401k contribution is $22,500 ($30,000 for those 50 and older). Financial Plans are often offered through your employer, or if you’re self-employed, can be set up through your financial advisor as a Solo 401(k).
There are many benefits to starting to contribute as much as possible to your 401k as early as possible. In this case, establishing a solid financial foundation for your own future leaves you more room to consider and plan for your family's financial legacy. If you reach this contribution benchmark each year, you are setting yourself up for success.
Consider Your Financial Legacy
529 Savings Accounts
When considering your children's future and educational pursuits, consider a 529 Savings Account, "one of several tools families can use to prepare for the growing costs of higher education," explains Forbes.
A 529 Savings Account is a savings account where parents may set aside money for their children with the sole purpose of covering educational expenses. This account is advantageous because the funds in the account grow tax free!! There are also some minor state tax incentives.
In the case that your children decide to follow an alternative to a college education, Forbes reassures that a recent "piece of legislation makes it possible for families to rollover up to $35,000 from a 529 plan to an IRA" starting in 2024. Our office highly recommends setting up a small monthly contribution into your childrens or future childrens 529 plans.
Estate Plans
Estate planning is the idea of setting up a plan for how your assets will be distributed to your family and loved ones after your passing. Estate planning can be an uncomfortable conversation, especially at this age. However, it is necessary to be prepared as it protects your family and assets.
While estate planning may seem only necessary for the ultra-wealthy, Forbes explains, "No matter how large or small your net worth, estate planning is a process that ensures your assets are handed down the way you wish after you pass away."
Furthermore, when there are kids in the picture, it’s important to articulate what happens to them, who they go live with, what assets are for them in the future and if something unforeseen happens to you.
Life Insurance
Life insurance, although another difficult conversation, is an excellent way to ensure protection for your family and assets. When thinking about a life insurance policy and its uses, think about things like; what kind of debt might your family be saddled with if the primary earner passed away or was no longer able to work. Is there a mortgage on your home (would you be able to afford to keep the home without your spouse's income?), are there student loans that should be considered, college tuition payments down the road, what type of income were you expecting to earn over the next twenty years? All of these factors play a role in determining what type of life insurance you may need to consider and the face value.
An added benefit to life insurance is that the contributions to your life insurance policy become a tax-free inheritance for your beneficiaries or tax free income for you should you decide to withdraw the cash value down the road.
While your thirties might seem early to start thinking about life insurance, Forbes explains: "How old you are when you purchase a [life insurance] policy can also drastically affect your premium. Buying a term life policy at age 40 instead of age 30 can increase your life insurance quotes by 36%. Waiting until age 50 to buy can increase the cost up to 212%."
Lay the Groundwork for the Next 60 Years
Consult an Advisor! The habits you create and portray in your thirties will lay the groundwork of financial success for the next 60 years. Let's make sure you are headed in the right direction.
Park City Wealth Advisors will assess your financial picture in relation to your needs, goals, and risk tolerance in order to formulate a personalized wealth strategy. Our dedicated advisors' primary goal is to help you plan and protect your financial future for generations to come.