4 financial strategies for your 30s and 40s

Building balance in your busiest decades 

By the time you reach your 30s or 40s, your calendar may feel like it’s been overrun by meetings, mortgage payments, school pickups, caring for aging parents and the ever-expanding to-do list of adulthood. These are the years when life speeds up, and money decisions get more layered. It’s a time when financial strategies are necessary tools for helping you stay afloat and plan for the future. Here are four key areas to focus on.

1. Know where your money is going and why

Evaluate your income and expenses, then put your money to work. 

If you haven’t looked closely at your budget lately, this is your moment. Start with the basics: income in and expenses out. As you review, don’t forget to include “irregular” costs like insurance premiums or holiday travel. If you find you’re coming up short, try making some small shifts like unsubscribing from underused services, switching to generic products over brand names or negotiating your bills.

If you have a surplus, you can decide how to put that money toward your larger goals, like building an emergency fund, planning for retirement or paying down debt.

2. Protect the life you’re building 

Prepare for the unexpected because sometimes it shows up early.

An emergency fund can help you take unexpected expenses in stride. Aim to save three to six months of total expenses. But even a smaller buffer can make a difference in your level of confidence and overall preparedness.

There are other safety nets to consider as well:

• Home, auto and health insurance
• Life insurance, especially if others rely on you for income
• Disability insurance, in case an illness or accident disrupts your ability to work
• An estate plan: This isn’t just for wealthy or elderly people. This is for anyone with loved ones to protect.

Consider meeting with an attorney to create your estate plan and formalize your wishes. If you have minor children, this is especially important because you’ll want to identify their guardian. By creating an estate plan, you’re setting your own decisions into motion rather than having someone else make them for you.

3. Make your investments work smarter for your retirement

While it may seem far away, don’t neglect saving for retirement.

Given the benefit of compounding returns, investing is a pivotal piece of a healthy financial strategy. In your 30s and 40s, time is still on your side, but long-term goals like retirement are getting closer. That makes this a perfect window to sharpen your strategy.

A few key principles:

• Explore features like auto-escalating your 401(k) to increase your contributions over time. A good general rule of thumb is to save 10% to 15% of your income for retirement.
• Use systematic investing to automate your investment strategy (think automatically transferring money each month or reinvesting dividends and interest).
• Check in on your risk tolerance and asset allocation.

If it’s been a few years since you reviewed your portfolio, or if you’ve never really had one, this is a great time to start with purpose. An Edward Jones financial advisor can help you decide on the balance between risk and growth that’s right for you.

4. Think about the future for your family

Care for your kids and your parents, without losing sight of yourself.

If you have children, you already know that raising them comes with a price tag. If college is a goal, a 529 college savings plan can be a smart way to set aside money, with tax advantages to boot. If you’re about to transition from day care to school, one approach is to invest a portion of what you might be saving into a college savings plan. Since you’re accustomed to not having that money, it’s less likely to be missed.

People in their 30s and 40s may also start supporting their parents, financially or otherwise. Whether providing support now or if you might in the future, talk to your parents about their own wishes so you know what they expect. Even if these topics seem overwhelming, it’s worth having conversations early before a health scare or crisis forces your hand.

How Edward Jones can help

Your 30s and 40s can be about building a future you want to live in. Thoughtful strategies, and a few honest conversations, can help you move through this season of life with more clarity. If you’re looking for a trusted partner who can help you get there, contact your Edward Jones financial advisor today.