In a perfect world, we would all begin investing the moment we entered the work force. In a perfect world, we would all budget properly and save the requisite amount we need to be in a position to handle emergency expenditures or to save for huge financial purchases.
But this isn’t a perfect world and we definitely are not all perfect with our money. So if you are in your 30s and have not started investing yet, you don’t need to freak out: there’s still time. Granted, your learning curve is steeper, but there is still plenty of time ahead of you to figure out what you need to save and to actually reach that goal.
With these tips, investing in your 30s is not nearly as scary as it might sound.
Know What Accounts to Invest In
The act of saving money is largely meant for the goal of retirement. We all aim to retire at an earlier age than the average indicates and doing so requires strict and diligent saving throughout the course of our working lives. The more you save, the more likely you are to retire younger.
That said, it is important to know what to contribute to. Contribute as much as you can to your 401(k). This money is tax free and your employers, in most cases, will match up to a certain percent. Max out your 401(k) where possible to take advantage of those pre-tax contributions.
Also using/contributing to things like an IRA, a Health Savings Account and other items set up to help you control your spending and take advantage of your ability to save will contribute to your long-term investments.
Know How Much You Need to Invest
The goal is typically to have $1 million saved by age 62. This is obviously less of a lofty goal the earlier you start. For instance, at age 30, you would need to save $6,900 per year. But if you don’t start investing until age 39, that number jumps to $15,300.
Of course, the more that you can save the better, so that’s just a guideline overall. And there are a number of ways to get to that goal other than just stashing away money in your bank account. Use the proper investing channels and that number can seem far less daunting with each passing year.