Your 30s are some of the biggest years of your life. For many, this is the decade when you’ll land that big promotion, get married, buy your first home or maybe have your first (or second) child. But along with these exciting milestones comes a steep uptick in financial responsibility. If you haven’t planned ahead for significant life changes, you might reach your 30s and wonder, “What do I do now?”
At Prometheus Private Advisory Group, we believe that when it comes to finances, it’s always best to plan ahead and prepare for the worst. That way, even if the economy takes a turn for the worse or your circumstances change, you’ll be set up for long-term financial stability. Fortunately, as Vancouver’s financial advisors, we have the expertise to help you take control of your finances. (Unfortunately for us, we’ve also got real world experience in what not to do, too.)
Don’t wait until it’s too late to get smart about your finances. Here are 5 things we wish we knew about financial planning before our 30s.
1. Don’t Live Beyond Your Means
So you finally landed your dream job or got that raise you’ve been waiting for. Time to pop the bubbly and buy yourself something fancy, right? We get it. It’s easy to get a little loose with your cash when you suddenly have more money coming in, but living above your means (or even just slightly below) won’t help you achieve the kind of financial stability you want — in fact, it could put you in serious trouble.
By all means, toast your raise and celebrate your promotion, but hold off on buying that new car or moving to a more expensive neighbourhood. Those things can wait. For now, live below your means as much as makes sense for you and bank (or invest) the rest.
2. The Earlier You Invest, The More You’ll Earn Over Time
Sounds like a no brainer, right? That’s because it is. The sooner you start investing your money, the more time it has to grow. Think of it this way: a seed doesn’t become a tree overnight — it needs time, care and resources to grow and flourish. (We’re talking about the money tree here, in case you missed it.)
Really, it comes down to compounding interest, which reinvests your asset’s earnings to exponentially increase your overall gains over time. We know investing can be intimidating when you’re first starting out, but we’re here to help you make smart decisions with your money.
3. It’s Never too Early to Plan for Retirement
In your 20s and 30s, retirement can feel like it’s a hundred years away. Out of sight, out of mind, no problem. Well, if you think retirement is a problem for Future You, that’s exactly what it’s going to become. It’s going to sneak up on you, one of these days, so wouldn’t you rather be prepared for it? We would too.
Even if you have a pension to support you in your retirement, it’s important to make smart choices now to set yourself up for your later years. There are tons of options for retirement planning, from reducing your expenses to investing to maxing out your Canada Pension Plan contributions. If you’re self-employed or a healthcare professional, you could also consider incorporating your business to save on taxes, which will give you extra money to invest and use towards your retirement.
4. Life Insurance is for Everyone — at Every Age
Life insurance is another one of those important things that everyone loves to forget about. But the longer you wait to get life insurance, the more expensive it will be. Premiums are largely based on your age and health (among other things), and it’s more likely for health conditions to develop as you get older. Life insurance also protects your family financially if anything happens to you, so it’s best to plan ahead.
At Prometheus, we believe insurance is the key to securing your long-term financial health. We use insurance as a tool for financial planning and investing to make sure you and your family are taken care of, no matter what. So if you’re wondering when you should get life insurance, the answer is yesterday. Call us. We’re here to help you out.
5. Get Professional Help with Financial Planning
Let’s face it, managing your finances can be overwhelming. That’s why many people prefer to just go about their daily lives and not pay much attention to what’s happening in their bank accounts. This laissez faire attitude can be extremely dangerous to your financial future. If thinking about finances makes you want to stick your head in the sand, it might be time to talk to a financial planner.
A financial planner can answer any questions you have about your finances, help you develop a long-term plan, guide you through your financial decisions and give you peace of mind that you’re making smart choices. Not only that: people who work with a financial planner accumulate about three times more assets than those without an advisor. There are some things you can fake in life but financial planning isn’t one of them.