As much as I would love for people in their 20s to get ahead and start investing, chances are they will begin to take retirement seriously in their 30s. My wife and I began to get our act together in our 30s and become debt-free before turning 40.
There are many reasons for people to start looking towards the future in their 30s. Lots of people have children that are in grade school. Once your children hit grade school, you will begin to understand that there is a bigger picture than just the lives we currently live. If we don’t think about the long-term success of our family, our children may face some of the same struggles that we did.
During our 30s, we also will see our friends struggling as well. Divorces almost become a daily occurrence in our 30s. Many of the people who were living in debt are exposed through social media and bankruptcies. Our parents may also be having a hard time with their finances.
With all this going on, we start to focus on cleaning up our future outlook. To ensure a bright future, we need to strengthen our relationships and broaden our financial horizons. Now, where do we get started?
A great place to start is by reading some books. I recommend “Think and Grow Rich” because it is about seeing and believing in your future wealth. I would follow that up with “The Millionaire Fastlane,” which talks about accelerating wealth creation. Between these two books, you should begin to formulate good day-to-day habits of success.
First, we need to address the elephant in the room, debt. We are all guilty of getting into debt in our 20s and early 30s. When we graduate high school or college and start our lives, we believe that our job will carry us to financial freedom. If we put all of our efforts into work, someone will reward us with pay raises and awards. Not!
We can keep our jobs, but we need to quit this mindset. We are solely responsible for our wealth creation, not our jobs. The chances are that in our 20s, we made purchases based on future earnings. We call this bad debt and some culprits are credit cards, loans, mortgages we can’t afford, etc. Well, it is time to unwind these all now.
Let’s first discover the truth about discretionary income. If you are spending money directly from your earned income job, you are wrong. Besides basic expenses (food, utilities, clothes), all earned income should buy assets. When those assets pay us, that is our discretionary income.
Budgeting is a huge part of our 30s and maybe our most significant takeaway. If we can learn how to budget our expenses and lifestyle tightly, we can prevent lifestyle inflation. Budgeting is how we begin to create wealth. When we have children, we need to be very aware of the invisible budget. This budget is money that is unaccounted for in our budget yet disappears every month.
As we get our spending, budgeting, and savings under control, we should start to see some cash flow remaining in our bank accounts. It is important not to get complacent in this time frame. We need to follow the four steps to becoming rich: destroy debt, lower expenses, increase income, and obtain assets.
Now, I will say something that may sound a little sexist, but I mean it in the best possible way. Women are amazing at budgeting. They can keep a household running smoothly, have a nice saving account, and prepare for emergencies and vacations.
The problem is that this is not enough. To be successful in the long run, you will have to make choices that may seem greedy. In my article “Hustle in Your 20s and 30s, Enjoy Your 40s and 50s,” I state that your 30s should be a time of immense cash flow.
It’s best to give an example. If a couple is making a combined $150,000/year, they should be well off. After taxes, expenses, 401k, and life, they have roughly $30,000/year to invest. A woman who controls the money may feel that this is enough because life is good, and everything is running smoothly. However, we need to get this investing amount up to $100,000 or even $200,000. I’m directing this towards women become more and more, they are handling the money and making the decisions.
Yes, we need to maximize how much money we are earning, especially in our 30s. There is no resting on our laurels. “20 Creative Ways to Make Money from Home” lays out some ways that we can diversify our income.
You see, we have no idea what the future holds. Our job as parents is to predict the future for our children, and since we can’t do this, all we can do is prepare for as much as we can. The best way to prepare is to become extremely wealthy.
So while we are earning good money from our jobs, it may be an excellent time to start a low maintenance business for passive income. These include creating a dog park, a herb garden, or renting out an 18 wheeler.
Since I am telling you to become greedy, what will you do with all this extra cash flow? Well, it is time to get serious about our investments. In our 20s, we learned about stock market investing, and hopefully, we took notice.
We need to get our money into some higher yield products—investments such as real estate investment trusts (REITs). REITs are great for investing in the long term, and you can get a 4-10% dividend yield from these securities. During this series, I review enough to get you started with REITs and making some solid purchases across various REIT sectors.
During our 30s, we also need to become aware of the velocity of money. This is the speed at which we can return our money from an investment and invest in another asset. For example, if we buy a Tesla for a rental business, how long before we get our money back. Once the investment returns our money, how do we reinvest it? The velocity of money is present in stocks, crypto, real estate, and business.
Speaking of real estate, we need to become very involved in this asset class in our 30s. Yes, real estate is expensive, but we cannot use this as an excuse. I wrote the Creative Financing in Real Estate series so that we do not have any reasons not to invest. We need to capture real estate using our wits and knowledge of leverage.
Our 30s may be a good time to look into the possibility of becoming a real estate agent and investor. I know it seems like a demanding profession, but it may be a career for you if you already have multiple streams of passive income. You will get the inside scoop on ideal properties, portfolio lenders, hard money lenders, private money lenders, fix and flippers, real estate wholesalers, etc. You can leverage this profession to become financially independent via real estate.
Finally, we need to learn about crypto currencies, if we haven’t already. If we don’t have time, we can focus on the main two, Bitcoin and Ethereum. We can also read books on these cryptocurrencies to gain a base of knowledge. I read “Bitcoin: Hard Money You Can’t F*CK With” and “Ethereum.”
I believe the main takeaway of our 30s is not to become complacent. I know I may have picked on the women a little, but it comes from the heart. Women are great at budgeting, but we may have to “become greedy” to remain successful in the long run. We can never have too many streams of passive income.
The idea of mailbox money should come to fruition in our 30s. Every day of the month, we should be earning money passively through rents, royalties, and dividends. If you can grasp this concept, you will be in perfect shape moving into your 40s. See you there!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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