You're in your 30s and wondering what you should focus on if you want to become financially stable. Perhaps you're experiencing regret with how you dealt with money in your 20s, perhaps you're sick of being stuck in a cycle of overwhelming debt, or perhaps you just want more for yourself. Whatever it is, all of this is possible with an intentional, consistent approach.
1: Budget
The first thing you want to do if you're trying to change the tide financially, is create a budget. A budget is not just about limiting yourself to spending a certain amount in the different areas of your life, it's about closely inspecting where all your money is going.
Moku reflection point: If you could never earn more money, how could you spend/ use the money you currently have?
Here's the good news, a budget will help you with this.
Download our FREE, customisable budget planning tool to help you set a strong foundation for financial health and wealth!
2. Decrease your reliance on credit or debt
One of the most crucial steps towards achieving financial stability in your 30s is to decrease your reliance on credit or debt. It's time to break free from the cycle of overwhelming debt and take control of your financial future.
How do you do this?
Start by assessing your current debts and creating a plan to pay them off. Make a list of all your outstanding loans, credit card balances, and any other forms of debt you may have. Prioritize them based on interest rates and pay off the ones with the highest interest rates first. This will save you money in the long run and help you become debt-free faster.
At the same time, it's essential to resist the temptation of taking on new debt. Avoid using credit cards for unnecessary purchases and try to pay for things in cash whenever possible. If you do need to make a large purchase, consider saving up for it instead of relying on credit.
Moku Tip: Look at those store/ retail accounts as well as your credit cards you have, and make it a goal to pay it off.
What are some debt management strategies you can make use of to pay off your debt faster?
The Debt Snowball Method
This method involves prioritising your debts based on their balances, regardless of their interest rates. With this method, you target the smaller debts first.
Here's how it works:
1. List all your debts in order from the smallest balance to the largest.
2. Allocate as much money as you can towards paying off the debt with the smallest balance while making minimum payments on the rest.
3. Once the smallest debt is paid off, take the money you were using to pay it off and add it to the minimum payment of the next smallest debt.
4. Repeat this process until all your debts are paid off.
The Debt Snowball Method is effective because it provides a sense of accomplishment and motivation. By paying off the smallest debts first, you'll experience quick wins, which can help keep you motivated and committed to your debt repayment journey.
The Debt Avalanche Method
Unlike the Debt Snowball Method, which prioritises debts based on their balances, the Debt Avalanche Method focuses on debts with the highest interest rates.
Here's how it works:
1. List all your debts in order from the highest interest rate to the lowest.
2. Allocate as much money as you can towards paying off the debt with the highest interest rate while making minimum payments on the rest.
3. Once the debt with the highest interest rate is paid off, take the money you were using to pay it off and add it to the minimum payment of the next debt with the highest interest rate.
4. Repeat this process until all your debts are paid off.
The Debt Avalanche Method may save you more money in the long run compared to the Debt Snowball Method because you are tackling the debts with the highest interest rates first. By paying off these high-interest debts sooner, you reduce the overall interest you will pay over time.
While the Debt Snowball Method provides a sense of accomplishment and motivation through quick wins, the Debt Avalanche Method focuses on saving you money on interest payments. It may be a better option if you have debts with high interest rates that are significantly impacting your financial stability.
Ultimately, the choice between the Debt Snowball Method and the Debt Avalanche Method depends on your personal preferences and financial situation. Both methods can be effective in helping you become debt-free, so choose the one that aligns with your goals and motivates you to take action. Remember, the key is to stay consistent and committed to your debt repayment plan.
I don't have any money to pay off my debt, what can I do?
If you don't have any more money to allocate towards paying off your debt, you should consider debt counselling at Meerkat.
Debt counselling is a proven, effective debt-management strategy that is intended for people in South Africa who can't afford to make their monthly debt repayments.
How it works:
- A Debt Counsellor will conduct a financial assessment to see if you qualify for the debt counselling (debt review) programme. Here they look at your income, expenses and the debts you are paying off. If you are struggling to make your monthly payments, there's a really good chance you qualify for the programme.
- A new restructured repayment plan will be worked out for you that could end up reducing your monthly debt repayment by up to 50%! This is achieved by negotiating with your creditors on your behalf to lower your interest rates on your loans. Another benefit for you which could end up saving you money in the long-run.
- Creditors and you will have to accept the proposed repayment plan. Creditors are very inclined to do this because they will be getting money from you to settle all your debt each month.
- This repayment plan is then taken to Court to ensure that your assets like your home and your car are protected from repossession.
- Instead of making several debt repayments, you now only make one, reduced monthly repayment for all your debt!
- You do this consistently until the term of your debt repayment plan has come to an end and you will be awarded with a Debt Review Clearance Certificate- your ticket to applying for credit again!
3. Save up or save more towards an emergency fund
Another crucial step in achieving financial stability in your 30s is to save up or save more towards an emergency fund. Life is unpredictable, and having a safety net in the form of an emergency fund can provide you with peace of mind and protect you from unexpected financial setbacks.
But what exactly is an emergency fund?
An emergency fund is a dedicated savings account that is specifically set aside for unforeseen expenses such as medical emergencies, job loss, car repairs, or home maintenance. It acts as a financial cushion, allowing you to cover these unexpected costs without having to rely on credit cards or debt.
Read: Emergency Fund: Why and How You Should Start
So how do you go about saving up for an emergency fund?
1. Set a savings goal: Start by determining how much you want to save for your emergency fund. Financial experts generally recommend saving at least three to six months' worth of living expenses. However, this may vary depending on your personal circumstances and risk tolerance. Assess your expenses, including rent or home loan payments, utilities, groceries, transportation, and any other essential costs. Multiply this monthly expense total by the number of months you want to save for, and you'll have your savings goal.
2. Cut back on non-essential expenses: Take a close look at your monthly expenses and identify areas where you can cut back. Are there any subscription services or memberships that you can cancel or downgrade? Can you reduce discretionary spending on eating out, entertainment, or clothing? By making small sacrifices and redirecting that money towards your emergency fund, you'll be able to accelerate your savings.
Read: 6 Expenses You Should Cut Down on to Save Money
3. Prioritise your emergency fund: Treat your emergency fund as a non-negotiable expense. Just like you prioritise paying your rent or home loan, make it a habit to contribute to your emergency fund every month. Even if you can only afford to save a small amount initially, every contribution counts and will add up over time.
Remember, building an emergency fund is a long-term commitment. It may take time and discipline to reach your savings goal, but the peace of mind and financial security it provides are well worth the effort. Stay focused, stay consistent, and before you know it, you'll have a robust emergency fund to protect you from life's unexpected curveballs.
Keep in mind that achieving financial stability is a gradual process that requires dedication and effort. However, by consistently implementing the strategies outlined in this blog post, you will gradually establish a solid financial footing that will enable you to cultivate genuine and sustainable financial stability.
Who is Meerkat?
Meerkat is a financial wellness company committed to empowering South African consumers to maximize their financial potential. We specialize in negotiating debt repayments, offering affordable insurance solutions, and assisting you in building an emergency fund for a secure future. Experience the Meerkat difference by filling out the contact form on our website and receiving a complimentary callback from our dedicated team today.