While you may be established in your career once you reach your 30s, it’s still not that easy to build wealth. Suddenly you’ve often got a host of other financial priorities like paying down debt, saving for your first home, and paying for childcare.
However, making sure your money is working for you now matters, especially when it comes to building wealth over the long term. Saving money is a good start, but more importantly, your 30s are a prime time to develop a consistent investing habit.
Think of this decade as a great time to learn new money skills that can help set you up for the future.
Key Points
• Building wealth in their 30s can help individuals save for a child’s education, take bucket-list vacations, and even retire early.
• Strategies for building wealth include establishing good money habits, such as setting up a rainy day emergency fund with three to six months of living expenses to handle unexpected costs that arise.
• Set clear financial goals for better money management like sticking to a budget and paying off debt.
• Maximize 401(k) contributions, especially if an employer match is available. Increase contributions regularly, such as once or twice a year.
• Explore opening up additional retirement accounts like a traditional or Roth IRA or a taxable investment account.
What Does Wealth Mean to You?
One way to motivate yourself to build wealth in your 30s is by thinking about the opportunities it can create. Retiring early or being able to enjoy bucket-list vacations with your family, for example, are the kinds of things you’ll need to build up wealth to enjoy.
Beyond that, wealth means that you don’t have to stress about covering unexpected expenses or how you’ll pay the bills if you’re unable to work for a period of time.
Investing in your 30s, even if you have to start small, can help create financial security. The more thought you give to how you manage your money in your 30s, the better when it comes to improving your financial health now and for the future.
So if you haven’t selected a target savings number for your retirement goals yet, run the numbers through a retirement calculator to get a ballpark figure. Then you can formulate a plan for reaching that goal.
6 Tips For Building Wealth in Your 30s
Curious about how to build wealth in your 30s? These tips can help you figure out how to save money in your 30s, even if you’re starting from zero.
1. Set up a Rainy Day Fund
Life doesn’t always go as planned. It’s important to have a nice cushion of cash to land on, should any bad news come your way, such as a job loss, a medical emergency, or a car repair.
Not having the money for these unexpected expenses can threaten your financial security. To prevent such shocks, sock away at least three-to-six months’ worth of savings in an emergency fund that can budget for your everyday living expenses, from rent on down.
2. Pump Up Your 401(k)
If your company offers a 401(k) plan, consider it an opportunity for investing in your 30s while potentially reducing your current taxes. This is especially true if your employer offers a match (though matching is typically only offered if you contribute a certain amount). The match is essentially free money, so you should take full advantage of it, if possible. (Note that SoFi does not offer 401(k) plans at this time, but we do offer a range of Individual Retirement Accounts (IRAs).
Aim to increase your 401(k) contributions on a regular basis. This could be once a year or twice a year, and whenever you get a bonus or a raise. Some plans allow you to do this automatically at certain pre-decided intervals.
3. Consider Other Retirement Funds
If you don’t have access to a 401(k), there are other options that can help fund your future and help you with building wealth in your 30s.
And even if you contribute to a 401(k), you may benefit from these additional options. For example, if you’re already maxing out your 401(k), you might continue saving for retirement with an Individual Retirement Account (IRA)
With a traditional IRA, you contribute pre-tax dollars, and depending on your income, tax-filing status, and whether you or your spouse have a workplace retirement plan, a certain amount can be deducted from your taxes. You pay taxes on traditional IRA withdrawals in retirement.
You can also consider a Roth IRA, depending on your income level and filing status (a Roth IRA has contribution limits based on these factors). Contributions are made with after-tax dollars and withdrawals are tax-free in retirement.
In addition to tax-advantaged accounts, you might consider opening a taxable investment account to make the most of your money in your 30s. With taxable accounts, you don’t get the same tax breaks that you would with a 401(k) or IRA. But you’re not restricted by annual contribution limits or restrictions around withdrawals, so you can continue growing wealth in your 30s at your own pace as your income allows.
4. Open a Health Savings Account (HSA)
If you have access to a Health Savings Account, this could be a valuable resource for building wealth in your 30s. For those who qualify, this is a personal savings account where you can sock away tax-advantaged money to pay for out-of-pocket medical costs. These could include doctor’s office visits, buying glasses, dental care, and prescriptions.
The money you save is pre-tax, and it grows tax-free. Also, you don’t have to pay taxes on any money you withdraw from your HSA, as long as it’s for a qualified medical expense.
You’ll need to be enrolled in a high deductible health plan to be eligible for an HSA. If your company offers health insurance, talk to your plan administrator or benefits coordinator to find out whether an HSA is an option.
5. Give Yourself Goals
One of the best ways to build wealth in your 30s involves setting clear financial goals. For example, you might use the S.M.A.R.T. method to create money goals that are specific, measurable, achievable, timely and realistic.
Then, start working toward those goals, whether it’s sticking to a budget or paying down debt like your credit card or auto loan. Once you experience the satisfaction of meeting these goals, you’ll be able to think bigger or longer term for your next goal.
6. Check Your Risk Level
Investing is about understanding risk, knowing how much risk you’re prepared to take, and choosing the types of investments that are right for you.
If you’re working out how to build wealth in your 30s, consider two things: Risk tolerance and risk capacity. Your risk tolerance reflects the amount of risk you’re comfortable taking. Risk capacity, meanwhile, is a measure of how much risk you need to take to meet your investment goals.
As a general rule of thumb, the younger you are the more risk you can take on. That’s because you have more time until retirement to smooth out market highs and lows. Investing consistently through the ups and downs using dollar-cost averaging may help you generate steady returns over time.
If you’re not sure what level of risk you’re comfortable with, taking a free risk assessment or investing risk questionnaire can help. This can give you a starting point for determining which type of asset allocation will work best for your needs, based on your age and appetite for risk.
The Takeaway
Investing in your 30s to build wealth can seem intimidating, but once you set clear goals for yourself and start taking steps to reach them, it can get easier.
Watching your savings grow through budgeting, paying down debt, and investing for retirement can motivate you to keep working toward financial security and success.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
About the author
Rebecca Lake
Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
SOIN-Q225-063