So last time we talked about the typical financial advice you’d hear in your 20s. That period of your life was really dedicated to change and establishing yourself as an adult. But, when you hit your 30s, you should be more settled and finding your groove with financial responsibility. So this piece is about building on the foundation of the basics you learned in your 20s and making it work to help secure your future.

# 1 – Keep It Simple

This expounds on living within your means, which we covered in the last post. When you get into your 30s, you really start to see a change in how you view material things. On the one hand, some people tend to go more materialistic and develop a Joneses complex. On the other, some people tend to move past such ambitions and focus on other things in their life. Ideally you want to be in the latter group. Stuff is ok, but it’s just stuff. Keep it simple and live life within your means in order to secure your future.

So what do I mean by keep it simple? What kind of stuff am I talking about?

Well, if you didn’t have the money in your 20s to buy a house, that may be something you’re looking at doing now that you’ve hit your 30s. Keeping it simple means that you’re not concerned with what the guys at work have, or that the ladies in your reading group still have weekly shopping trips and live in a half a million dollar home. By keeping it simple you choose to buy only what you can comfortably afford and that meets your needs.

Now, that’s important. Meeting your needs. You may be able to comfortably afford a $300,000 home, but do you need it? Is it really necessary to have 6 bedrooms for a family of four? This is the point in your life where you have to determine which values are most important to you. Are you concerned with what others will think of your house, or are you concerned with how you and your spouse will fund college for the kids (if this is a goal) and retirement for yourselves.

Keep it simple.

# 2 – Pay Off Your Debt And Kick The Habit

You really have to master number one in order to be effective in number two. It’s all well and good to pay off your debt, but if you’re extending yourself beyond your means, you’ll likely find yourself in a similar situation before long. Now, you’ll notice that this appears in both the 20s and 30s. That’s because some people don’t focus on their debt in their 20s, they’re too busy racking up more. Now’s the time to really get serious.

Let’s say you did get out of debt in your 20s, but you’ve relapsed and gotten more debt, or you’ve added to what you’d worked hard to reduce. In any event, the idea is that by your 30s you should be ready to kick the debt habit altogether. By building on the basics of what you learned in your 20s, pay off what you owe and save for the things you want. Don’t take on new debt unless it’s good debt, and here’s where you learn the difference between good and bad debt.

Good debt is a mortgage – as long as it’s a reasonable mortgage. Credit card debt is generally considered bad debt. Debt for a car is debatable. Some say it’s good while others say it’s bad. I say it can go either way. If you get a decent car within a reasonable price range and it holds it’s value well, then it’s a good debt provided you handle it responsibly. If you just want that Escalade to show off around the neighborhood, well, that’s probably a bad debt.

As a general rule, though, your 30s are where you want to pay off all of your non-mortgage debt, including the car – whether it’s good or bad.

# 3 – Diversify Your Portfolio

During this stage of your life, you should be pretty comfortable with investing and knowing what your limitations are. If you’re ultra conservative, you should be looking at investment options appropriate to your risk tolerance. You should be considering the long haul and not just what’s coming tomorrow or next week. The point of diversifying your portfolio is to prevent having all of your eggs in one basket. You’re protecting your future.

# 4 – Protect Your Assets

This maxim refers to covering your assets via insurance, including yourself since you are your biggest asset. This is really about preparing for life’s little surprises. Sometimes it’s not enough to just have an emergency fund. You want to make sure that you have plenty of insurance – homeowners or renters insurance, health insurance, short and long-term disability insurance, and life insurance. You also want to make sure that you have adequate amounts of coverage in each category, especially life.

Think about it. Life insurance is designed to replace yours or a spouses income in the event something happens to them. If you only have a small amount, you’ll be hard pressed to replace the income once expenses are deducted. You’ll want to sit down and consider what you have and what you need. This is also why I recommend that you accept credit life and disability insurance on any loans you do take out. Protect your life insurance. No one wants to use life insurance to pay off a loan because it eats into that income that needs replacing. Credit life and disability insurance can be had for fairly cheap and it takes care of the loans in the event of death or disability rather then relying on a life insurance policy that is designated for something else. Make sure you have enough coverage all the way around, just in case.

# 5 – Draw Up A Will

I know this is something most people don’t want to talk about. They put it off thinking they have plenty of time, but the truth is, you never know. It’s better to be prepared. So make your wishes known. Put it to paper and keep it in a safe place. Make sure you keep this updated as anything changes with your life, but this is why it’s usually recommended in your 30s rather than your 20s. Because change is frequent in your 20s, a will during that time may be difficult to keep up with, though it’s still a good practice if you can do it. If you have a family and children, this is especially important. They’ll be dealing with quite a lot if something were to happen to you, don’t make them worry about the finances at that time.

# 6 – Make Retirement a Priority

In your 20s you start investing because it’s good to start young and you want to keep an eye on your future. But, in your 30s you’re more grounded and it’s time to get serious about investing for your future. You’ve hopefully sowed your oats, more or less, and are now ready to settle down and take care of business. That means you need to identify your specific goals for retirement and develop an action plan for accomplishing them.

You should determine what you want to do in retirement, how much you think you’ll need, and how you plan to get that amount. Consult advisors, calculators, retirees that have been where you are, and anyone else that you feel can offer you beneficial advice. But, you have to be committed. You can’t just say that it’ll work out in the end and not worry about it. Unless you want to be working up until the day you die, you need to worry about it.

So, like I did with the first, I’ve left some maxims out to open discussion in the comments. My goal in this series is to really get you thinking about where you are, and where you’d like to be. Are you achieving your goals? Why or why not?

Related posts:

1. Financial Maxims: In Your 40s
2. Financial Maxims: In Your 20s
3. Financial Maxims: In Your 50s
4. The 2009 Financial Road-Map
5. A brief Guide on Financial Preparedness