Your 30s are often considered your prime earning years. At this age, you’re in a great position to start capitalizing on life experiences and building your nest egg. Starting to save earlier in life gives you more options later on and puts you in a great position when it’s time to retire.
We asked a panel of Forbes Finance Council members to each share one tip for people in their 30s to make quicker progress on their savings goals. Follow their tips to start saving more money and securing your financial future.
Finance Council members offer advice on saving money and boosting savings goals.
Photos courtesy of the individual members.
1. Self-Direct Your Retirement Account
Not many people are aware that they can invest outside of the stock market while still using a tax-advantaged retirement account. A self-directed IRA opens the doors to an array of alternative assets, such as real estate, private equity, notes and more. This strategy provides a hedge against stock market volatility and allows for diversification and better control over investment returns. – Jaime Raskulinecz, Next Generation Trust Company
2. Think Beyond A 401(k)
Certainly continue to fund your 401(k) as much as you can religiously, but supplement with a Roth IRA like the IRS Section 7702 that determines the cash value of a life insurance policy and how the policy should be taxed. You can hedge the future taxes and will have access to that money before you you can touch money from your 401(k) without the 10% penalty for emergency or opportunity. – Neil Jesani, BeamaLife Corporation
3. Pocket Your Raise
Most of us are guilty of lifestyle creep. As we earn more, we spend more. Pretend that next raise never happened and have it deposited directly to your financial planner. You’ll never miss it. In five years, you’ll be blown away by how it builds and be happy you did it. – James Hewitt, Travelex
4. Automate Your Savings
Through our research, we have found that out of sight and out of mind is key. When you have easy access to your savings, it can be too easy to use it. By automating your savings with a mobile application and having it coincide with payday, you create a great way to pay yourself first. This ensures that you are regularly saving a little bit which will lead to a big reward long term. – Kathleen Craig, HT Mobile Apps
5. Invest For Income
Invest for more than growth value. In other words, many invest in a stock in the hope and expectation that it will increase in value alone. Instead, seek out income investments that have the same growth potential in value and also generate income. If you’re generating income with the investment, a return is realized early on and you can reinvest the income to grow your savings faster. – Matt Scott, 7xcapital.com
6. Convert To A Roth IRA
When making contributions to an employer 401(k) plan, the IRA contribution may not be tax deductible. Explore if you can immediately convert the non-deductible or after-tax IRA contribution to a Roth IRA. The tax-deferred (traditional retirement plans) and after-tax (Roth IRA plans) compounding of investment returns over decades will have a materially positive impact on your long-term wealth. – Sandi Bragar, Aspiriant
7. Live Below Your Means
Live below your means and put away at least 40% of your earnings. It’s tempting to get a bigger house, buy a nicer car and take more lavish vacations when you earn more money. By doing so, however, you’re setting yourself up for less in the long run. Sacrifice instant gratification for long-term happiness. – Paul Hadfield, Hadfield Group
8. Just Start Saving
Many young savers make the mistake of thinking that they cannot afford to save. If you just save something, even if it is $10 a month, those savings will grow, compound and build a strong base for your planned savings at a later time. – Sheryl J. Moore, Wink, Inc.
9. Be Tax Efficient
As you make more money, it’s very important to have great guidance around you, especially when it comes to taxes We have helped many clients save hundreds of thousands in taxes by knowing the laws and how to structure the companies. Having that skill set in your team is very important and will enable you to save more going forward. – Khurram Chohan, Together CFO
10. Choose A Plan With A Health Savings Account
Many employers these days offer qualified high-deductible health plans that are compatible with health savings accounts. You can save money on health insurance premiums and the HSA will allow you to contribute money tax-free, lowering your tax burden today while you build a medical nest egg that you can use for healthcare expenses like Medicare premiums in retirement. – Danielle Kunkle Roberts, Boomer Benefits
11. Contribute To The Matching Point
Take advantage of your retirement accounts. If you work for a business that does 401(k) matching, contribute to their matching point. Then, max out your IRA to the annual contribution limit each year. This way you are building savings specifically for your nest egg. You won’t take money from these accounts to fund a mortgage or pay for a new car; this money is just for your retirement. – Jared Weitz, United Capital Source Inc.
12. Eliminate Credit Cards
In order to progress quickly with savings goals, you should eliminate credit card debt. Your extra money needs to be invested, not wasted paying high-interest rates and minimum payments on credit card debt. If you add up all your debt payments per month and multiply it by 12 months, I am confident it will amount to an impressively large sum that would help you accelerate your savings goals. – Geanette Rodriguez-Ojeda
13. Use A High-Interest Savings Account
Start an emergency fund in case your car breaks down or you need to replace something in your house. Keep at least $1,000 in there. Use a high-interest savings account such as Ally, which features a 1.7% APR. If your company doesn’t have a 401(k), start a Roth IRA and make low-risk investments. They may only earn 5% interest, but that’s much better than losing money. – Jeff Pitta, Medicare Plan Finder
14. Pay Yourself First
The fastest way to grow your nest egg is to simply pay yourself first. Set up monthly out-of-sight expenses where you contribute to your investing accounts. Utilize retirement accounts through your employer or open an IRA or Roth IRAs. Once you’ve started implementing this strategy, look at other investment opportunities that might fit into your budget. – Justin Goodbread, Heritage Investors