10 Smart Money Moves to Consider Before You Turn 30

Written by The Inspired Investor Team

Turning 30 is an important life milestone – it’s often viewed as the true beginning of adulthood, and it's the age when many expect to have their money figured out. While you still have time to get your finances together after entering your fourth decade, the choices you make when you’re younger build the foundation for lasting financial stability. From building healthy saving habits to tackling debt and getting started with investing, these smart moves will help set you up to manage your finances with confidence.

1. Learning the basics of budgeting
Think of a budget as a roadmap to help you reach your financial goals. Do you want to buy a house in the next five years? Are you saving up for a car? Track your spending over several months to understand where your money goes and how much you can set aside each month to save and invest. You can always adjust your budget when your finances and priorities change later in life, but budgeting is a good habit to create now.

2. Building healthy money habits
A healthy relationship with money starts with good financial habits. Now is the time to learn how to automate savings and investments – consider dollar cost averaging for instance – and to ensure you’re paying your bills on time. Studies show that building strong habits takes time, so don’t get discouraged if you make a mistake here and there.

3. Tackling high-interest debt
While debt can sometimes be necessary or useful – like with taking out a mortgage, which can help you build wealth – you will likely be off to a better start if you enter your 30s without carrying high-interest credit card debt if possible. These loans often have interest rates of between 19.99% and 25.99%, and at those levels, debt can quickly compound. Consider taking a "debt avalanche" strategy, which focuses on paying off the highest interest rate balances before lower-rate debt. Lowering what you owe can help you reach your financial goals faster.

4. Creating an emergency fund
When you need quick cash for surprise expenses, like a car repair or a visit to the vet, a rainy-day fund could come to the rescue. A general rule of thumb is to set aside three to six months worth of income, preferably in an account separate from the one you use for day-to-day transactions that will allow your money to grow – perhaps with interest – and be easily accessed in a pinch. You can always start by saving $500, then $1,000, and keep building.

5. Learning how ETFs work
Like mutual funds, exchange-traded funds (ETFs) let you buy an assortment of companies, generally based on an index like the S&P/TSX Composite Index or the S&P 500. ETFs can help you diversify your portfolio, while offering long-term growth potential at a relatively low cost. RBC Direct Investing offers several commission-free ETFs, which allow you to buy and sell these funds with no commission.

6. Using a TFSA
The name tax-free savings account (TFSA) is a bit misleading because, while the account can be used to save cash, the real benefit comes when you use it to invest. Why? Because any money inside the account can grow tax-free. Plus, you don’t pay taxes on gains when you withdraw your money. If you open a TFSA early, you could make the most of it’s potential for compounding growth.

7. Establishing a solid credit score
Paying bills on time, keeping balances low and managing credit responsibly over time will help you build a stronger financial profile and open the door to better borrowing options. Making payments late, running up your credit card or having a limited credit history can impact your credit score, and potentially make it harder to qualify for loans or favourable interest rates.

8. Planning for home ownership
A down payment is just one piece of the home-purchase puzzle. Closing costs, plus moving and repair expenses can add up fast. Typically, the earlier you can start saving, the better. Learn how tools like a First Home Savings Account and the RRSP Home Buyers’ Plan work so you can be aware of every option at your disposal to save money for this big purchase.

9. Using the ‘sinking funds’ strategy
You may start earning more money in your 30s, but you may also be tempted to spend more on regular expenses and luxuries like a big concert or a vacation. This is referred to as ‘lifestyle creep’, where your daily spending grows along with your salary. While lifestyle creep is something to watch out for, that doesn’t mean you can’t treat yourself to a larger purchase. Consider the sinking funds strategy, where instead of scrambling to pay for something when the bill arrives, you instead “sink” small amounts into a separate account on a regular basis. When you hit your goal, take that money out of the account and spend it on what you’ve earmarked it for. This way you can save for milestones like retirement or a house, as well as the things that make life fun.

10. Investing in yourself
Your 20s are the time to experiment and grow, both personally and professionally. Consider investing in yourself, whether that's taking different courses at school, launching a side hustle or learning a skill, like a new instrument or cooking a certain type of cuisine. Spending time on these activities now can pay dividends for years to come.