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Your finances in your 30s

Your assets are growing, but so are your responsibilities .

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For most people, your 30s are one of the more challenging periods of your life – you may be starting a family or you may have couple of kids, you may be buying a house, you may be figuring out how to share assets with your spouse, and you may be starting to get anxious about retirement. All of this makes your 30s a real make-or-break financial decade.

This week, in part two of our series on finances at every age, we’re going to be talking about how to take care of your money business in your 30s. Remember, you should already have in place the good habits we discussed last time– setting a budget, monitoring your spending, living within your means, and saving. With that foundation, you’re ready to jump into high gear in your 30s.


1.      Marry wisely

According to Statistics South Africa, the average age for a first marriage in South Africa is 29 for women, and 33 for men, and for marriage overall, it’s 30 and 34 respectively (the average age for second marriages is 47 for women and 52 for men, so there’s that). This means that the average South Africa will kick off his or her 30s with a really important decision: whom to marry.

Marriage is a big and complicated thing, so I’ll just confine myself to the financial aspects thereof. First, differences about money are one of the leading causes of divorce; there are no decent statistics on South Africa that I could find, but in the US, finances are the major cause of divorce. Divorce is really expensive – scholarly research suggests that divorce can reduce a person’s wealth by 77%. On the plus side, marriage is a major wealth builder, with married Americans typically finding themselves almost twice as wealthy as their single counterparts (again, no great SA stats). So you need to get married, and you need to avoid getting divorced.

This makes your marriage one of your most important financial decisions, and it also makes talking about money and finances with your potential spouse key. Make sure you and your honey have similar ideas about what to spend money on, how to budget, how to save, and how to invest. Open dialogue is crucial; if you’re having trouble discussing this, check out this handy guide from Forbes or this one from the New York Times. With the right partner and the right attitude, your marriage can be a major boost to your finances (among many other things).


2.      Make contingency plans

Now that you have a spouse and perhaps children, it’s time to start taking things more seriously. If you haven’t already done it, now’s the time to plan for the worst – make a will, and buy life and disability insurance. It’s not nice to think about, but if something happens to you, what will become of your family? Plan now, because sometimes bad things do happen.


3.      Start getting really serious about retirement

Assuming you are already in the habit of saving and learning about investment, now is the time to get serious about saving for retirement. You should have a savings account with about 6 months of salary saved up for emergencies, and you should maintain that. You are probably also keen on saving for a house or your kids’ education, and should do so. However, it is also important to be saving for retirement in a serious way.

There are a lot of options available, and you really should talk to a financial adviser, but the basics are the same – have a portfolio that mixes equities, property, cash, and bonds, monitor it closely, and balance your risk tolerance with your need for returns. ETFs are a terrific, low-cost way to invest in stocks, listed property, and bonds and South African inflation-linked government bonds are another nice add-on to a good retirement plan.

You may have the kind of job that puts money aside for you in a provident fund, which is great, but remember that there are no guarantees that fund will perform well enough for you to retire comfortably, so take an active hand in your retirement planning. It’s also a good idea to put away more than your company is deducting – you can invest the additional money yourself, giving you more control over your ultimate retirement nest egg.


4.      Think carefully about your home purchase

Buying a house is a big deal, and you should think carefully before jumping in. Make sure it’s a house you can afford, that it meets your needs, and that it is in a neighbourhood that will probably still be decent when you need to sell. Owning a home can be expensive, and for some, renting may be better. Don’t just buy a house because it’s what everyone does – think it through, run the numbers, and make the best decision for you and your family.


5.      Save with intent

Finally, you have a lot of things to be saving for in your 30s – your house, your kids’ education, your retirement, maybe a new car – so take the time to plan your savings out. Figure out exactly how much you need to save for each item on your list, when you’ll need that amount by, how much you need to save every month, and so on. If you’re rigorous about it, you can do it all. It just takes discipline and forethought. 


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