Maximize Savings: Strategies for Financial Success in Your 30s
Here are some tips and strategies for how to start building wealth in your 30s.
In their 30s, many people start thinking more seriously about the future—and how they will pay for it.
Getting into the habit of investing is one of the most important steps you may take for the future of your finances.
Review key ways millennials can maximize their savings and build wealth. It’s never too late to start.
When you reach your 30s, growing older “someday” might start to feel like more than just a theory. And life could feel more serious as you progress in your career and take on new personal and family responsibilities. It’s also an age when people start looking to the future and thinking more about saving and building wealth.
Building wealth can feel like an uphill battle, especially when it’s in conjunction with student loans, housing expenses, caring for children or parents or both. But it doesn’t have to be a slog. Here are some tips and strategies to help you start building wealth in your 30s.
Track Your Spending
Before you start building wealth, you may need to find extra funds to put toward investing. If you're like most people, you may not feel there's enough money in your budget to allocate for your future.
The first step is to start tracking how much you're spending and how much you’re earning. Compare the two amounts and figure out if you have a surplus or a deficit.
If you don't have extra money to save, look over your expenses and find where you can make some changes. For example, you may be able to cut recurring subscriptions or shop at consignment stores instead of buying new clothes.
One way to track spending is to follow the 50-30-20 budgeting rule, which says to spend 50% or less of your salary on needs, 30% on wants and 20% on savings or debt payoff. See how your current spending aligns with those percentages and make the necessary changes.
50-30-20 Makes Budgeting Easier
50% on Needs
30% on Wants
20% on Saving and Paying Off Debt
Increase Your Income
Cutting expenses can sometimes feel like a punishment, but another way to jump-start your savings rate is to increase your income. Research shows one of the best ways to get a higher salary may be to switch employers.1
If you’ve been at the same company for a while, you may be underpaid for your experience. And since prices for just about everything have exceeded normal rates in the past few years, your salary likely isn’t going to help you stay ahead of inflation.
Create a list of ways you’ve made your company money or saved them money. Then, look at what similar jobs are currently paying. Once your ducks are in a row, bring a formal raise request to your supervisor. If your managers don’t agree, it may be time to start looking for a new job.
Changing jobs isn’t the only answer for increasing income. Maybe you can take advantage of overtime, add extra shifts or get a part-time job. If the part-time job matches a hobby, such as working at a golf course, driving cars between dealerships or a side hustle at football or baseball games, you may enjoy it—and make more money.
To Build Wealth, Get Started
A basic goal for how much to save at your age is between 5% and 10% of your income for retirement. As you get older, the percentage will increase. If you can’t afford to do that quite yet, consider starting with an amount you can afford.
One harmful misconception is that you need a large sum of money to begin investing. The reality is that you may be able to start with lower minimums with some caveats, such as setting up recurring monthly investments. Financial companies with low or no minimum investments may have other fees—such as brokerage fees or inactivity fees—of which you’ll want to pay attention.
As you increase your income or reduce your expenses, try to funnel those extra funds toward your investments. For example, if you pay off a loan, add the monthly payment amount to your monthly investments. If you get a raise, immediately increase your contributions to account for the higher salary.
Contribute to a Retirement Account
A 2022 survey3 found that more than 95% of companies offering 401(k)s also have a matching program, which means employers will match contributions that an employee makes to their 401(k). These matching contributions may be as high as 100% of the employee’s contributions, usually up to a certain limit.
A basic guideline is to always save enough to get the full employer contribution. Every dollar you receive from your employer is one more dollar you don’t have to save yourself. For 2024, the 401(k) and some other retirement plans annual maximum contribution limit of $23,000 for employees. Including employer contributions, the maximum annual limit is 100% of an employee's salary or $69,000, whichever is lower. Unless you have credit card debt, you may want to consider contributing enough to your 401(k) to get the match.
If your company doesn’t offer a 401(k), you may consider an Individual Retirement Account (IRA)—traditional or Roth. In your 30s, a Roth IRA may be a good choice when you have a long way to go until retirement. With a Roth, the compound interest can grow tax-free rather than tax-deferred (you pay taxes when you withdraw the money) like a traditional IRA offers.
In 2023, the maximum annual limit for IRA contributions is $7,000. If you are self-employed or own a small business, you could also consider a SEP IRA, which has a $69,000 annual contribution limit, depending on your financial situation.4 SIMPLE IRAs are another option for small businesses with less than 100 employees. Deciding between a SEP or SIMPLE IRA depends on your company size and flexibility of contributions, among other things.
Don’t Be Too Conservative
When you're in your 30s, you may consider a more aggressive strategy by taking on more investment risk. For example, you may want to allocate your portfolio with more stock funds, which carry more risk, than bond funds that typically have less risk. But having both is important for practicing the important strategy of diversification—or spreading your money over several different kinds of investments to help manage market volatility.
Taking on a bit more risk when you're young may pay off when you’re older. Plus, you have the luxury of time for a recovery if the markets should tank. On the flip side, if you're too conservative and keep all your money in cash equivalent investments—like money markets—it could hinder growing your money into a nest egg you can put toward long-term goals like retirement.
Knowing how much risk to take with your investments is an important factor in determining what to invest in. Your level should be based on how much time until you need the money and how much risk you can comfortably live with. If you’re not sure, our investment consultants are here to help.
Find the Right Financial Professional
Figuring out how to invest can bring back memories of taking AP Calculus. And if acronyms like 401(k), ETF or IRA sound like gibberish, you can enlist the help of a qualified professional.
But picking the wrong advisor can cost you in avoidable fees. You’ll also want one that has fiduciary accountability to you, which means the advisor can only recommend products that are in your best interests.
While you don’t need a professional financial planner to invest, it can help you get off on the right foot. You are not obligated to see the professional at a specific interval, but a yearly check-up may be appropriate just to ensure you’re on track to retire at your desired age.
Take Advantage of Your 30s
The third decade of life is when many people start to look ahead and think about how to save for long-term goals. It may feel challenging to save and build wealth, but at this stage in your life, just getting a start, cutting back in some areas and contributing in others can go a long way toward maximizing your savings. If you start saving and investing today, your future self will likely thank you.
One Third of Those Who Changed Jobs Made 30% More, Conference Board, February 2022.
Conference Board, February. 2022.
Plan Sponsor Council of America, 65th Annual Survey of Profit Sharing and 401(k) Plans, March 2022.
SEP Contributions, Irs.gov, July 2023.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, employment, legal or tax advice.
You could lose money by investing in a mutual fund, even if through your employer's plan or an IRA. An investment in a mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Please consult your tax advisor for more detailed information regarding the Roth IRA or for advice regarding your individual situation.
Taxes are deferred until withdrawal if the requirements are met. A 10% penalty may be imposed for withdrawal prior to reaching age 59½.
Diversification does not assure a profit nor does it protect against loss of principal.
Generally, as interest rates rise, the value of the bonds held in the fund will decline. The opposite is true when interest rates decline.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.