Last year I wrote a blog post called “Financial Advice for the 20-Something.” I thought it time to follow-up with a post for all you “30-Somethings” out there.

You probably have a lot going on. Your career is a bit more established and your personal life may be getting more complex as marriage and kids have entered the picture. You (hopefully) are no longer living paycheck-to-paycheck, but aren’t sure what to do with your extra cash. When you have kids, debt (either student loans or credit card), and your retirement to fund, where is the best place to put your money to work? Someone keeps calling you about buying an annuity or whole life insurance policy. Should you listen to what they have to say?

As a general rule, it’s good to put 50% of your paycheck toward paying your necessities (all types of insurance is included here), 30% toward paying for your wants (like cable, dining out, and travel), and 20% toward savings (including paying down debt).

If you’re rolling in it, you may be able to contribute to all the items on my list below. However, if you have to prioritize where to invest your limited resources, you may want to review my comments on each item then decide what works best for you.

NECESSITIES:

1. Life Insurance- If someone’s depending on your salary (i.e. kids, elderly parents, or spouse) consider buying term life insurance. It’s relatively cheap and you’re less likely to have health issues now that may prevent you from being insurable later in life. If you have kids, this is a must. At a minimum, have enough coverage to pay for their expenses until age 18. Regarding whole life policies or annuities...they tend to combine life insurance with investing and charge a high fee to do so. Instead, just buy term life insurance and invest the rest of your money on your own.
2. Disability Insurance- What will you do if you can no longer work? Could your spouse cover all the household expenses? Could someone else step in to help? If not, consider buying long-term disability insurance. It’s better to get some outside of work, but if you can get some through work then that’s better than nothing. (The reason it’s better to get it outside of work is if you develop a medical condition that makes it impossible to get insurance, then you leave your company, you will no longer have coverage.)
3. Other Insurance-Try to bundle your car/renters/homeowners/umbrella insurance with one company to take advantage of reduced rates. Also, if you get married be sure to pass that information along to your insurance agent for possible lower premiums.

WANTS:

1. Saving for a down payment on a house- This could be part of your “savings”, but I’d rather you categorize it as a “want”. Cut back on some of your non-essential expenses in order to work toward your worthwhile goal of home ownership. I suggest you open a separate bank savings account and call it something like “My First House” and have a certain amount of each paycheck automatically deposited into it. Do not “invest” this money, but instead deposit it into an account that has no chance of declining in value.

SAVINGS:

1. 401k with company match-This is a no-brainer. Free money is free money. Contribute to your 401k at least up to the point you get your company match. Some companies give you an option to automatically increase your contribution each year. If your company offers this then sign up. You probably won’t notice any change to your paycheck, but it’ll have a huge impact on the size of your account on the day you retire!
2. Pay off high interest credit card debt- After contributing enough to your company retirement plan to get that free money, focus the rest of your savings allocation to paying off your debt as quickly as possible. Pay the minimum each month for all your cards except for the one that charges the highest interest rate. For that one, pay off as much as you can afford each month. Once that one is paid off then focus on paying off the next highest charging card. Continue this strategy until all credit cards are paid off.
3. Student loan debt- Although I’m listing it here, it doesn’t necessarily mean that this should be your next highest priority. If you’ve got a low interest loan it might make sense to make your monthly payments but don’t rush to pay it off early. However, if you’re paying a high interest rate on this loan then by all means try to pay it off as soon as possible. Remember, student loan debt is generally the only debt not forgiven when filing for bankruptcy. Also, if your parents co-signed for the loan then they’ll be on the hook for the loan if you die.  [A Note on Debt: The only new debt you should accumulate is a mortgage. Yes, that also includes buying a car. If you can’t build up the cash to buy a new car without a loan, it’s probably a car you can’t afford.]
4. Roth IRA- Contributing now, while you’re likely in a lower tax bracket than you will be later in your career allows you to grow your investments tax-free for a very long period of time. The longer you hold your Roth, the longer the power of compounding works in your favor. Also, as you get older you may make too much money to be allowed to contribute to a Roth. [2017 Roth contribution limit for those under 50 is $5,500.]
5. 401k with no company match- If you’ve contributed as much as you can to your Roth IRA, then by all means continue to contribute to your company’s 401k until you reach your yearly contribution limit ($18,000 in 2017). It’s still a good deal since you’re contributing to it with pre-tax money and the taxes you pay are deferred until you take the money out in retirement.
6. 529 College Savings Plans for your kids’ college- Yes, this should be your lowest priority. Although it’s great if you have enough money to fund your kids’ college expenses, it has to take a back seat to funding your retirement. The cliché is true: Your kids can get a loan to pay for college, but you can’t get a loan to pay for retirement.

Obviously, this is not a complete list of issues that 30-Somethings face, but I hope I touched on some of the bigger issues that you’re facing.

Good Luck and Good Planning!