30-somethings take financial control
Mduduzi Luthuli
A famous Bible verse, 1 Corinthians 13:11, states: “When I was a child, I spoke as a child, I understood as a child, I thought as a child: but when I became a man, I put away childish things.”
This really resonated with me a few years ago on my 30th birthday. I had to put away my childish ways, especially around personal finances.
Life can get complicated in your 30s. You might be amid countless transitions, like moving up in your career, starting a business, buying a home, getting married, growing your family and more.
But by focusing on a few key tenets you can gain control of your finances.
Invest in yourself
Gain the advanced education, industry certification or specialised job skills necessary to make yourself more qualified, marketable and ultimately indispensable.
Embrace investing
If new to investing or if you have never invested through a market crash, your resolve is yet to be tested. If you invest in equities, know that eventually the market will test your conviction. Don’t fail.
At 30, you should have most of your portfolio in shares.
However, don’t rush to invest in the first equity portfolio you find. Do your due diligence and ask an investment manager to assist you in creating a well-diversified, low-cost, equity portfolio that will hold its own when the eventual crash comes.
Increase retirement contributions
You should already be contributing towards your retirement. Next, get into the habit of increasing contributions consistently, annually or when you get a bonus/raise.
Perhaps you can set up “auto increase”, which allows you to choose a percentage increase of your contributions and how often.
Improve your credit score
You can do something about bad credit.
Start by pulling your credit report; you may be able to identify errors, like late payments or active overdue accounts that have long been paid off. Removing these issues can help you build some momentum.
Then, focus on paying down debt, paying bills on time and lowering your credit utilisation rate to 40% or less.
Evaluate insurance needs
If you’re married, have kids, bought a house or made any other major changes in your 30s, take a look at your insurance needs and ensure you have proper coverage.
In case of emergencies
Most experts recommend saving around three to six months of your average living expenses. Commit to building your emergency fund through careful budgeting and making the most of unexpected money.
Rather than investing it, stash it away in a high-yield savings account, where it’s safe but not earning 0.01% interest.
Mduduzi Luthuli is an investment manager at Luthuli Capital