Finances in Your 30's - More Debt, Some Savings

While your 20’s are often about accumulating debt and having little to no income, your 30’s also tend to be about accumulating debt, but this time there is an income.

People in their 30’s usually are trying to move out of the tight financial circumstances of their 20’s.  This mean they are paying off the debt they built up in student loans and credit cards, and trying to purchase better quality times that will last longer (car, furniture).  It’s these last things that can make life the most difficult for people in this age group.

When buying a home or vehicle, most people think of the size and age they want rather than the cost.  They often think of the home their parents have and want something about the same size or even bigger.  What many 30 year olds forget is that their parents didn’t get that larger home until they were in their late 40’s or early 50’s.  They worked for 20 years, often at long career jobs before being able to purchase that larger home.  People in their 30’s are trying to buy that same level of house with only 5 to 10 years of work behind them.  This makes the monthly payments so tough that very little is left for anything else, and they better hope that no emergency comes up.


When buying a home, you should get a modest home that will meet your needs for the next 5 to 8 years.  This way you shouldn’t be putting so much of your paycheque towards a mortgage that it hurts every month for years.  Buying a home is a big decision, and as we have seen in the past 2 years, it isn’t guaranteed to grow in value every year.

The same should be said for buying a vehicle.  A vehicle usually loses about 40% of its value in the first 3 years.  This makes a new vehicle a poor investment for those who don’t have lots of money to spare.  The most effective use of your money is to buy used, about 3 or 4 years old, and make it last for another 6 or 7 years.

As always, avoid credit card debt, and don’t do the no payment down or rent-to-own purchasing as the cost is similar to credit cards.

You should also be starting your retirement savings during this time, looking at RESPs for your children, and get a will.  It’s a big time in your life, with responsibilities, assets, and goals changing a lot from your 20’s, but if you keep the debt under control, it will make life a whole lot easier for the rest of your life.