As we approach the milestone of turning 30, many of us ponder our financial situation and wonder whether we’ve saved enough money to secure our future. There’s a general notion that by the time we reach this age, we should have achieved a certain level of financial stability. However, life’s unpredictable nature means that not everyone finds themselves in that ideal financial position.
In this article, we’ll explore the concept of having a certain amount saved by the age of 30 and provide strategies to increase your savings levels if your current balance falls short of your goals. Let’s dive into the world of financial management in Australia and discuss ways to work towards greater financial security.
Saving by 30
The idea of having a specific amount saved by the age of 30 is a common benchmark for financial security. It’s often viewed as the age by which one should have a stable emergency fund, some investments, and a plan for the future. But this concept can vary widely based on individual circumstances, life goals, and local economic factors. It’s crucial not to feel pressured by this notion and instead focus on achieving financial security at your own pace.
Personal Finance Management
Budgeting
Drafting a working budget from the ground can make a big difference in rewiring your spending habits built up over the years. Start by compiling all your income and expenses, plus any long-term savings plans.
Emergency Fund
An emergency fund is a safety net that provides financial stability when unexpected expenses arise. Some finance experts claim that an emergency fund’s rule of thumb is that it must have enough money to cover up to six months’ living expenses.
Debt Management
Address existing debts, such as credit card debt or student loans, as part of your financial strategy. Paying down high-interest debts is essential for financial health.
Investing
Consider investment options to grow your wealth over time. Speak with a financial advisor to explore investment opportunities that align with your goals and risk tolerance.
Saving for Retirement
Start saving for retirement early by contributing to superannuation accounts or other retirement savings vehicles. MorningStar AU personal finances director Mark LaMonica said that if you have been able to get your finances organised and saved well before you enter your 30s, you can still prepare for retirement by using any savings from superannuation contributions into more non-super investments. However, you must also account for potential inflation sapping your returns if you have a target amount to save up by the time you reach 65 or Age Pension threshold of 67.
Financial Education
Take time to enrol in personal finance management courses or seek recommendations on notable finance books to read in your spare time. The combined knowledge to gain from either books or the courses may be critical to building your financial skills. However, when checking out financial books, make sure the author has an established body of work and their lessons are more practically attuned to the Australian financial landscape with proven results.
How to Increase your Savings
If you find yourself well below your desired savings level as you approach 30, don’t worry; there are steps you can take to increase your savings and financial security:
Set Realistic Goals
Reassess your financial goals and set realistic targets. Understand that everyone’s financial journey is unique, and it’s more important to make consistent progress than to compare yourself to others.
Create a Savings Plan
Develop a savings plan that outlines how much you need to save each month to reach your goals. You can arrange with your payroll provider to deduct a certain amount of your net pay to a separate savings account.
Ditching Unnecessary Expenses
Check up parts of your current spending level which can be done away and possibly save more money in the process. Eliminate non-essential expenses, such as dining out frequently or excessive subscription services.
The above may have some merits given Australia’s current cost-of living situation. A January 2024 consumer study from NAB revealed that Aussie GenZers have adopted certain budgeting attitudes shown on social media to change their own spending habits. A list of expenses to cut back on put restaurant dine-ins at No 1 with $124 saved, with food deliveries ($96) and no lunch-outs/coffee/pastries ($73) completing the top three. Given other potential saving hacks, the respondents figured they could set aside as much as $450 a month.
Increase Income
Consider ways to increase your income, such as taking on a part-time job, freelancing, or exploring career advancement opportunities. Explore side hustles or part-time businesses that can generate additional income. Many Australians have found success in areas like e-commerce, content creation, and online tutoring. Any income generated may be immediately deposited in your dedicated saving accounts.
Debt Reduction
If you have a lot of debt items, focus on settling all the high-interest debts first. By allocating more money to paying off loans, you free up funds for savings.
Review Investments
If you’re already investing, review your portfolio and tweak it wherever possible to match current goals and risk tolerance. A diversified investment portfolio may help reduce risk.
Financial Advisor
Consult a financial advisor or planner for personalised guidance. They can help you create a tailored financial plan and offer expert advice on investment strategies.
Reassess Lifestyle Choices
Reevaluate lifestyle choices that may be draining your finances, such as a high-cost housing situation or an expensive car. Sometimes downsizing can significantly impact your savings capacity.
Stay Committed
Saving for financial security takes time and discipline. Stay committed to your goals, and remind yourself of the long-term benefits of financial security.
Conclusion
As you approach your 30s, the notion of having a specific amount saved can be intimidating, but it’s crucial to remember that financial security is a journey, not a destination. Your financial situation is unique, and it’s more important to make progress at your own pace rather than compare yourself to external benchmarks. Effective management, budgeting, and a commitment to saving are key elements in achieving your financial goals.
DISCLAIMER: This article is for informational purposes only and does not constitute official financial advice. QUICKLE is not connected with any company mentioned. Please consult your financial advisor for more tailored solutions.
