I’m 30 next month and feel that it’s time I settled down and got serious with my finances, but where should I start?
Turning 30 can signify a shift in thinking, for many, especially when it comes to finances. From buying a home to pensions, get on the right path early and your finances will be set for life.
With people staying longer in education and enjoying travel experiences, our 30s are the decade when things really change: settling down, getting a mortgage, thinking about kids and career, becoming financial grown-ups, in other words. It’s probably the most crucial decade for your money whereby if you get it wrong, you’ll be playing catch up for a long time.
Remember that the future is going to come one day, so develop goals, write a plan so that your goals become achievable target rather than remain dreams. Life is stressful enough without worrying about your money, so here are some areas where you can get that scaffolding up to help build your goals.
Budget
Drafting a budget, as you would for a business with income and expenditure, is a daunting task but it’s a great place to start. It’s easy to get caught up in the here and now, a lovely lifestyle, a job with disposable income, but your 30s is the time to work backwards from your goal. Pay yourself first by setting up a standing order into a savings account.
Remember to avoid impulse purchases. Create a balance between living for now and saving for the future.
Debt
Building debt during your 20s to go travelling, buy a car or simply enjoying life can cause issues in your 30s.
If you can’t afford it, don’t buy it. The credit register keeps track of any missed loan payments and bad credit can cause many an issue going forward.
When it comes to loans, PCP loans are not as good as they seem. It might look cheap, but if you cannot afford the balloon payment the garage will roll you into another contract. Credit cards are to be avoided unless you can clear the balance in full each and every month.
Buying a home
The typical age of a first-time buyer is their late 30s. This is far later than it has ever been, and getting yourself mortgage ready is a key goal for most 30-somethings. Buying a home provides security of tenure but this is getting more and more difficult. However, this should not put you off aspiring to plan to buy. Start by getting your accounts tidy for a future mortgage application. Get rid of debts if you can, save up and don’t touch it. Show normal, necessary spending flowing through your account.
Central Bank rules now allow for four times’ income as a borrowing limit, and just 10pc deposit. There may also be help available for new properties and new builds as the State offers the generous Help-to-Buy support and the First Home shared equity scheme. There are also generous grants available to take on a project such as a vacant home that needs renovation.
Pension
If life is expensive now, then falling off a financial cliff at 66 won’t be fun. We are living longer than ever. The State knows this and doesn’t want to be on the hook for any more than the basic pension. You may say you can’t afford to save but remember that by the time you reach 40, you’ll only have 312 pay days left until retirement if you’re paid monthly.
The State offers extremely generous pension tax relief and those aged 30-39 can put away up to 20pc of their income, claim up to 40pc tax relief and with the fund growing tax free, nothing else comes close as an investment.
Protection
With all those financial goals, protecting your income is important. Without it, the goals come to nothing. So, consider life insurance, illness cover and income protection. It’s not as expensive as you think, and tax relief may be available on your premiums too which can save you up to 40pc.
Contact us for details of all tax relief available.