This post may contain affiliate links and we may get paid a small commission if you click on a link. Please read our disclosure.
I have been really excited about writing this post as I reflect much about what my 20s was about and how it could have been better financially.
The 20s really are the golden years. If you were fortunate to have met the right people and began to design your life from then, you’d be miles ahead of your peers 5 to 10 years later.
Life presents us with options daily and the choices you make in your financial life today will transform your future either positively or negatively.
I was coaching a 28-year-old today on an exciting start-up she is working on. What was interesting about listening to her was that she thought she’d become old and missed the boat.
I laughed. A lot.
Although this post is aimed at people in their 30s, please don’t despair if you’re in your 40s or even 50s.
It is never too late to start a business or manage money better. I know this because my mother started what has become her most successful venture when she was 55!
That successful outcome has led to her building up a pension pot and an array of income-generating assets that most would envy.
Add to that, she has done it as a first-generation immigrant and with the myriad of challenges that comes with that.
So, if you’re in your 30s right now, I’d like you to pay very close attention to the tips that are about to follow.
[redbar]Remember, the secret sauce for winning is about running your race and surpassing well-crafted goals you’ve set yourself in relation to your life journey.[/redbar]
If you model these and stay focused, you’ll most certainly transform the trajectory of your financial life over the next 5 to 10 years:
1. Start Failing Already
This might seem counterintuitive, but to fail at anything, you have to have started something.
The worst thing you could possibly do in your 30s is to cruise through it in a 9 to 5 job and not take the risk of starting something.
I had mentioned my mother earlier and her grand success at the age of 55. What I haven’t told you is that she had started, succeeded and failed at many other businesses in her 30s and 40s.
With each failure came greater persistence and the lessons learned to become better next time she tried.
Our 30s are filled with many challenges – Marriage, children, career etc. However, it is also our most energetic and distraction-filled stage of our lives.
Consider your failures as assets. The access to technology, content, people etc that we have today is our generational advantage.
Don’t partake in these as a consuming passenger. You have to get into the driving seat and ride the wave to your own grand success.
So get out there, do stuff and fail. And when that happens, get up and do it again and again.
Related: 5 Ways To Start A Business For Free At Zero Risk
2. Choose Financial Independence
You can either choose to live your life the ordinary way and keep chasing status, or you can choose to chase freedom.
The action word there is to “choose”. By doing nothing and plodding along through your 30s, you’re choosing the former by default.
This is the essence of Life Design. Read the classic Designing Your Life: How to build a well-lived, joyful life.
I have previously written to you about how to Plot Your Escape. Financial independence is a superpower that comes out of a conscious decision to design your life.
Most people in their 30s will live the life others have designed for them simply because they have no self-convictions and plans of their own.
You have the opportunity now to do something different. To choose a path that will give you years of your life back from the dreaded rat race.
Choose rightly today. Grab a sheet of paper and ask yourself, what type of life do I want, and what will it cost?
Related: How Much Money Is Enough?
Knowing this information and where you’re today, puts you miles ahead of most people.
I for one know that by making this decision early in my personal life and actioning it deliberately, we’re already at least 20 years ahead of most of our peers.
It of course isn’t a race, but knowing that you have the option of early retirement to do whatever you want and whenever gives you considerable game-changing advantages.
Related: Plot Your Escape. Choose Financial Independence
3. Invest Through The Stock Market
Investing through the stock market is one of the necessary pillars of wealth creation, with others including starting a business as covered above.
Notice I did not say, Invest “In” the stock market. There is an important difference here.
When you invest, you’re really focusing on acquiring assets. The stock market is a vehicle that gives you access to a variety of assets.
Hence, investing through the stock market, you have a decision to make:
- Invest in individual assets i.e. individual companies or shares
- Invest in a basket of companies i.e. funds. More on this on #4 below
There are other assets classes you could of course invest your money in such as property, bonds, business etc.
Your 30s is your wealth accumulation phase and your asset allocation should really be focused majorly in equities (75%+). The average return to indexes in this asset class over the last 100 years is circa 7% per annum.
However, what you choose to invest in through the stock market matters. The goal should be to maximise gross returns and minimise costs i.e. one-off and ongoing fees.
Related: Understanding Investment Fees and Why It Matters
4. Invest In Index Funds
Whilst stocks and shares are popular and encouraged by the media and the financial industry, it is usually done for a reason.
People typically pick stocks emotionally and without a great deal of understanding about what they are getting into.
What ends up happening is that they typically lose money and try to create a diversified portfolio by buying even more stocks they know nothing about.
This is a guaranteed way to give away your hard earned money to the financial industry.
Instead, you should separate your emotions from your investing.
What to begin doing in your 30s is to invest in broad-based index funds. Why do these matter?
- You’re buying the entire index! Essentially a tiny piece of every company on the index.
- They’re extremely cheap and so you aren’t giving away your wealth to active fund managers as time passes.
- You get exposure to the all the various companies in the index and earn a return from each one.
- They are super diversified and grow your wealth as time passes.
I’ll be writing an entire post on index funds shortly, so stay posted.
5. Increase Your Savings Rate
This by far is the most straightforward way of becoming Financially Independent if you do not want the hassle of a side hustle etc.
However, this path alone will take a much longer period of time if pursued in isolation.
I wish I understood early enough the inverse relationship between my savings rate and when I could retire.
[yellowbar]Most people know saving is intuitively a good thing. However, tying it to life-changing goals such as become mortgage free or Financially independent is what most don’t do.[/yellowbar]
The higher your savings rate, the less you spend, and the more you have to invest and grow your net worth.
If you’re consistent with it and hit savings rates of 50%+ of your disposable income, then you’ll be a rarity among your peers.
Most people think money comes into their hands for spending. This is a poor mentality.
Related: How Much Money You Should Have Saved By Age
6. Focus on Personal Development
By far, the number one asset to invest in is yourself through your 30s. By this, what I really mean is seeking both knowledge and understanding.
The former forces you to actually immerse in what you’re learning and most importantly, put your acquired skills to action.
I recall turning 30 and having mixed emotions about my life and path. On one hand, I felt I was doing fairly well, but on the other, I felt I had so much more to achieve.
The motivation and momentum to see my 30s as an opportunity to ride on the super higher way of life came through personal development.
I started reading alot more books. I literally made the decision of having a bookshelf in every room of our home.
Having empty shelves means they need to be filled with book, which meant I had to spend some time and money building my library gradually.
Related: Life Changing Books I Love
Other things I do include taking short courses and listening to niche podcasts on things like marketing, sales, leadership, investing etc.
These will help you to build alot of confidence because you will be able to have authority in these areas as time passes.
This confidence is what you’ll need to make a game-changing life shift, which I cover in #8 below.
The final point on personal development is the need to build strong and positive relationships.
You can have alot of knowledge and understanding but still not get anywhere without access to the right people.
I heard a great quote once that said: “Every behaviour is outsourced to an environment”.
This is essentially saying, if you want a particular outcome, you need to put yourself in environments that force such outcomes to happen.
Hanging around with people who are already where you want to get to is pretty much a guaranteed way of getting to the same destination.
7. Tackle Personal Debt Aggressively
One of the best things we did on the path to Financial Independence was to tackle our debts aggressively.
We avoided credit card debt by only buying what we had the money for, and this helped us spend within our means.
Mortgage debt is really where the battle can be won. Debt compounds and every £1/$1 you overpay by helps get you closer to debt freedom.
[redbar]By doing this, our home mortgage term went from 25 years to 12 years, to 7 years, to 5 years (or only 60 payments); all within 6 years of having a mortgage.[/redbar]
To execute this strategy, relying on your salary only is futile. You need dedicated income from other sources that should get plowed directly against your debt.
It will require hard work and perseverance, but you continue to chip away at it, and it will disappear.
10 Tried and Tested Tips to Help You Become Debt Free
8. Create Digital Assets
Most people go through life-consuming what other people create. Almost as though great content is owed to them.
There are 2 kinds of people in the world, namely, primary:
- Consumers of content
- Producers of content
If you’re reading this right now, I’d like you to pause for a second and consider which camp you belong to.
One of the best mindset switches you could make in your 30s is to switch from a primary consumer to a producer of content.
This is important because:
- It gives you time to try stuff, make mistakes or fail
- Gives you the opportunity to create high-quality content that then has years to work for you passively.
Today, we have a grand opportunity to create value for others through digital assets.
I particularly love these because technology acquisition has never been cheaper and anyone can get involved!
I know of someone in her late 20s who absolutely smashed it and made $500k in year one from one course.
Although one could argue this is unusual, it isn’t exceptional. What she did could be done by anyone but the journey starts with being a producer!
Related: FREE 7 Days How To Start A Successful Blog Course
9. Property Hacking
One of the best things I ever did when I bought my first property was to take on a tenant/lodger immediately.
This turns your house immediately into an asset because it becomes income generating. This helped a great deal in increasing my savings rate and slashing my mortgage debt.
Do this as early as possible and ideally for a few years before marriage and children come along.
Another hack is to buy a property as close as possible to your workplace such that you completely wipe out travel costs.
The above didn’t work for me as I couldn’t afford zone 1 London at the time. Instead, I bought in zone 4 and bought cheaply, with lower debt coupled with a cheaper commuting option.
10. Avoid New Cars
The 20s and 30s are the years of courting and seeking out an ideal partner. I can certainly tell you that having a flashy car did not find me the ideal partner.
Instead, it made me broke and I lived my life trying to keep that lifestyle up.
There is nothing worse than buying a brand new car, losing value on it daily and paying financing expenses monthly.
[yellowbar]This is a poor man’s way of thinking. I come across many significantly wealthy people and most of them drive second cars such as Renaults or Nissans etc, or nothing at all.[/yellowbar]
However, when you tally up their net worth, they’re in the millions of pounds. This is no coincidence.
If you want to think and be rich, you have to begin acting in by making smart decisions early.
What’s better than a minimal or frugal lifestyle? A partner who subscribes to the same thinking. Find one and you’ve found gold!
This doesn’t mean you aren’t generous or don’t enjoy life, it just means you ’re more a master of your money and you’re deliberate about your spend.
Related: The Secret Sauce To A Guaranteed Rich Life
11. Pick Your Employer Deliberately
As early as you can, choose an employer that pays that highest possible contribution into your pension scheme.
Although I enjoyed working with and helping to grow start-ups, one major regret is that small or start-up companies do not make significant pension contributions.
A friend of mine grew a pot of over £100k in a little space of 5 years, through matching his employer's contributions in a large company.
Coupled with the tax rebates you get for contributing into your pension, this could soon make-up a large part of your net worth.
So don’t just choose a job that pays a high basic a salary. Judge your job offers by how generous the pension contributions are. This will matter very much in time.
To conclude, your 30s are your golden years. Your years of energy, wealth accumulation and graft. Choose what you do with your time and brain wisely.
What game-changing money moves are you making at the moment? Or what do you regret not doing? Please comment below
Do please share this post if you found it useful, and remember, in all things be thankful and Seek Joy.
In regards to item 10, couldn’t I just lease the car rather buy it and return it when I am done which means I only pay, over a period of time, the depreciated cost?
Also, item 8 where you said “I know of someone in her late 20s who absolutely smashed it and made $500k in year one from one course.” How did she do this and what exact course are you referring to here?
The Humble Penny says
You can absolutely lease a car. The thing is, what car are you leasing and for how long? Everyone I know who leases a car has no end in mind. Re course, the strategy is via distribution with a share of revenue. Basically, getting other cheerleaders onboard. Especially influential ones. This compounds the attraction and hype factor of any product (including courses).
Leasing a car is a bad way to go, the monthly payments don’t sound too bad but if you x it by 12 and see what you have spent over a year it puts it into perspective, and you are left with nothing. If you get a car on PCP you usually have to agree to 3 years of monthly payments, then at the end of that the car has depreciated massively yet you still need to pay the remaining amount (which is for the original value not the depreciated).
I bought a sports car 5 years ago and it’s essentially worked out as free transport as it’s gone up in value and I’ve been able to enjoy a great car. The key is to buy an interesting car at the bottom of it’s depreciation curve so you don’t foot the bill for the depreciation and if you pick the right one you can even make a bit of money, or effectively have free use of a car for a few years.
I’d never, ever buy new. No matter how much money I had, there is always a far more interesting second hand car for the money. You get a more interesting car and vastly less depreciation.
Hiya Ken, what are index funds? Is this a stocks and shares ISA?
The Humble Penny says
This post explains all –
Your S&S ISA is just the tax free environment that you invest from.
The index fund is the vehicle (or group of companies) that you actually invest in.
That post should explain it clearly. If not, give me a shout.