At a glance…
- A lot has changed over the past three decades since compulsory employer-paid super was introduced.
- 18 million Australians now have retirement savings.
- Editor of Money Matters, Effie Zahos, has provided an overview with everything you need to know.
Your 30s are often where things start to feel more ‘real’ financially. You might be earning more than you were in your 20s, but at the same time, your expenses are probably higher too.
Rent might be higher if you’ve moved into a bigger place, or you could be taking on a mortgage for the first time.
If you have children – or are planning to – the cost of raising them can also add to your expenses. It’s easy to see how the pressure on your money can build.
Retirement still probably feels a long way off, but don’t underestimate the impact the decisions you make in your 30s can have down the track.
This is the decade where being strategic with your money really starts to matter.
Turn good habits into a clear plan
Your 20s were mainly about building basic habits like saving and staying on top of your spending, but your 30s are about turning those habits into a plan.
That means deciding in advance what you want your money to do for you and being more intentional with it.
Rather than just saving what’s left over after paying your mortgage and rent and bills, you can reverse the process:
- ● Set clear savings and investing targets
- ● Work out how much you need to set aside each pay cycle to reach them
- ● Automate it so the amount is transferred every pay cycle without you having to think about it
Tackle bigger financial commitments
This is often the decade where financial commitments increase significantly.
For many people, property becomes a major focus – whether you’re saving for your first home or paying off a mortgage.
If you have a mortgage, ideally you should aim to pay more than just the minimum repayments.
Even small extra repayments or using features like an offset account can also help you save on interest. It’s also a good idea to review your loan at least once a year to see if you could get a better deal.
Your 30s are often when the cost of children enters the picture. From childcare through to schooling and everyday living costs, they can make life significantly more expensive.
You don’t need to have everything mapped out in advance, but factoring these costs into your broader plan can help you stay in control.
Build a stronger cushion
In your 30s, having a larger buffer becomes even more important.
With higher fixed costs, less flexibility, and potentially other people depending on you, aiming for around three to six months of essential expenses can give you a valuable safety net.
Get your super in order
In your 30s, it’s important to start paying a bit more attention to your super.
Start by doing a basic clean-up:
● Make sure you know where your super is
● If you have multiple accounts, consider consolidating them – just make sure you won’t lose insurance or other benefits
● Review the fees you’re paying
● Confirm your employer contributions are being made correctly. Getting your super organised now makes it easier to make better decisions later.
Make your super work harder
Once the basics are in place, it’s worth looking at how your super is invested.
If you haven’t chosen your investment option, there’s a good chance it’s sitting in a default balanced fund.
That’s not necessarily a bad thing, but with around 30 years still ahead of you before retirement, you might consider a higher-growth option. It’s riskier and comes with more short-term ups and downs, but over the long term it will generally deliver a higher return.
Start boosting your super
You might have more expenses competing for your money in your 30s, but it can be a good time to actively add to your super where possible.
Salary sacrificing can be a tax-effective way to grow your balance. It means part of your before-tax salary is paid into super. These contributions are taxed at just 15%, which is likely to be a lot less than your personal tax rate. That means more of your money goes towards your super instead of tax. It will reduce your take-home pay, but not necessarily by a lot, so it’s worth doing your sums.
If you’re on a lower or middle income, you may also be eligible for a government co-contribution when you make after-tax contributions.
And if one partner is earning less or taking time out of the workforce, strategies like spouse contributions or contribution splitting may be worth exploring.
Protect what you’re building
Protecting your income becomes more important, especially if you have a mortgage or children. That’s where insurance such as life insurance, total and permanent disability (TPD) cover and income protection comes in.
You may already have some cover through your super fund, but it’s worth reviewing what you have, how much you’re covered for and what it’s costing you.
The key is making sure it’s enough to support you and your family if something unexpected happens.
Keep investing beyond home and super
With so much focus on property and super, it’s easy to overlook investing outside of those areas, but it can play an important role in building long-term wealth.
Continuing (or starting) a regular investing habit – whether through shares, ETFs or other assets – can help spread risk and give you more flexibility.
3 simple money wins:
- Check your super for multiple accounts and unnecessary fees.
- Review your home loan and see if you could save by refinancing or making extra repayments.
- Increase your savings or super contributions when you get a pay rise or higher paying job.
This article originally appeared in Money Matters by The Australian Women’s Weekly. Purchase here.
Information is correct at the time of writing. Any advice provided is general in nature and does not take your personal circumstances into consideration. Readers should seek their own financial advice.
