At 30 you may have your first mortgage, have started a family, and be well on your journey towards financial wellbeing. However, if you’ve hit 30 and suddenly think you’re over the hill, rest assured when it comes to building financial wealth, time is still on your side. Take the time to review these questions to see if you’re on the right track.
Am I financially literate?
“I speak to people every day about money,” says Tony. “Even people who are successful in other parts of their lives often don’t have the first clue when it comes to money.” At 30 it’s not too late to benefit from the financial gains that simply come from the long-term. “Time is what allows you to achieve financial goals,” says Tony. “But if you don’t start getting your act together now, your 65-year-old self will be cranky with you.”
How much debt do I have?
It’s likely by the time you are 30 you will have accumulated some debt, whether it’s a student loan, a car loan or a credit card. “At some point, lenders want their money back,” says Tony, “so you need to do it in the most cost efficient manner possible.” The MoneySmart website has a whole section on how to manage your debts, and includes a calculator to help work out exactly what your debts are and how much you owe. Now is the time to consolidate your debts and get them paid off as quickly as you can.
Is it time to buy a house?
“The first thing people need to do [when they’re thinking about buying a house] is not ask, “What’s the maximum I can borrow?”. Instead they need to ask, “What can I reasonably afford?”, this is Tony’s advice. “You do the calculations with the current interest rate, but also at an interest rate a little bit higher and work out whether you can still afford to buy if the interest rate was to change.”
Have I started a family or do I plan to soon?
In Australia, early 30s is the most common age for new mothers, so it’s likely you’ve started a family or plan to soon. “Kids are an expensive business,” Tony says. “The first thing is to understand your money. If you don’t know how much you’re spending, you don’t have control of your situation. Then, you need to work out how to survive on one income for a period. You need to get your head around how the Paid Parental Leave scheme works and how long that will fund you.”
With dependents, Tony adds, “It’s also time to get serious about your health insurance and life insurance.” Consumer advocacy group Choice has created a quiz you can do to see if you need health insurance. Life insurance is more important now because you have people dependent on you and your income. You want to be sure they are protected if something happens.
Do I have an emergency fund?
“You have to expect the unexpected with kids,” says Tony. “And you’ll need an emergency fund in place.’ MoneySmart offers useful tips on how to set up an emergency fund for life’s inevitable unexpected expenses.
Tony also recommends income protection. Income protection is often included in super, but Tony says: ‘Don’t assume that is enough. That’s a mistake. Almost certainly it won’t be. If you’re in your thirties and have kids, it’s a really important issue. You need to ask a couple of basic questions: how much do I need and what’s a good premium to cover it.’
Am I keeping an eye on my super fund?
‘You can ask people some simple questions about their super and often they don’t know the most basic things,’ says Tony. Now is the time to educate yourself. If you’re an employee, know what fund you’re in. Understand where your money is going: does your fund include life insurance, income protection, perhaps even total permanent disability insurance? How much? Do you need to top up with extra insurance? If you’re self-employed are you a member of a super fund? It’s highly recommended that you be. MoneySmart’s Retirement planner can help you work out whether your super is on track.
* Tony Sandercock provides general financial information only. As a financial adviser he does not endorse any product in particular.
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