Setting Realistic Goals: How Much Money Should I Have Saved By 30?
Your financial situation and goals may change as you go through life and reach milestones. While everyone’s situation is different, it can help to regularly review your goals and ensure they’re realistic and align with your values.
For some people, 30 may be a good age to conduct a thorough financial assessment and determine whether your savings are on the right track. You may have completed your education, have a steady source of income, and are looking toward the future.
Have you started saving for retirement? How are you doing with student loan repayments? Are you going to be a homeowner soon? You may have these questions on your radar as you approach your big 3-0 birthday. Understanding whether you have enough money for the future can help you be more prepared to take on financial responsibilities and enjoy the experiences you want.
So, how much money should you have saved by 30? We help you find the answer below.
How much money has the average 30-year-old saved?
By age 30, you may already have experience creating a budget and setting aside money from each paycheque towards various savings goals. Whether saving for retirement, paying a mortgage, reducing your student debt, or saving for your kid’s post-secondary education, now may be a good time to check in with those goals.
According to Statistics Canada, in 2019, the average person under 35 had $7,400 saved in their respective financial accounts. The median was $2,500. These numbers don’t reflect how much assets the average person has in the specific age group, such as income, property, and retirement.
With a solid budget, consistency to reduce your loans and debts, and ways to increase your income, you can help set yourself up for financial success as you turn 30.
Five ways to save more money at age 30
At 30, many people still have a long way to go in their careers but may have already hit a few milestones and goals. Whether you’re happy with your current savings plan or not, here are five things to consider that can help increase your savings at age 30 so you can be better prepared for the future.
Prioritize your emergency savings fund
Many experts say an emergency fund should be one of your top priorities. An emergency fund is typically the equivalent of three to six months of expenses. You can keep it in a dedicated savings account or as part of your daily banking account. The idea behind an emergency fund is it’s only supposed to be drawn from in an emergency, such as unexpected medical bills or losing your job.
Your emergency savings may become even more important in your 30s because your financial obligations may increase. If you have kids or are a homeowner, a sizable emergency fund may help contribute to your financial security. An emergency fund is like an insurance policy. While you hope nothing happens, you have a safety net for any worst-case scenario that prevents you from needing to borrow money, or withdraw your investments or retirement savings.
While you likely have other goals you’re saving for and may be wondering how you can balance everything, don’t sleep on your emergency savings. Your emergency fund can help prevent you from falling into further financial troubles when something unexpected happens.
Contribute to both an RRSP and TFSA
An RRSP is a Registered Retirement Savings Plan, and a TFSA is a Tax-Free Savings Account. These are registered savings accounts available in Canada through various financial providers. The RRSP and TFSA can help grow your funds and maximize your savings and benefits for financial goals like retirement. RRSP contributions decrease your taxable income for that tax year, and TFSA contributions give you tax-free earnings on your investments.
Some employers offer RRSP contribution matching. If this is available through your employer, you may be able to take advantage of this type of program to add money to your account without making as many deposits yourself. Both RRSPs and TFSAs have annual contribution limits. If you have additional money and contribution room available, you can deposit any extra money into your RRSP or TFSA account to help maximize your savings and money growth potential.
There are other registered accounts designed to give you tax breaks and benefits for specific savings goals, like the First Home Savings Account (FHSA). You can look into these different accounts to see how you get the most benefits to reach your goals quicker and more effectively.
Pay high-interest debt first
Like building an emergency fund, getting rid of high-interest debt can be a top priority. Financial institutions and providers charge interest on debts. In addition to repaying the loan, you also pay interest.
If you don’t want to accumulate a lot of interest on your debts, you may want to focus on paying them off first before you focus on investing money. Debts with high interest rates will have expensive interest payments, which may slow down your savings.
Types of debt may include overdue credit card payments, student loans, and mortgage payments. List your debts and determine the interest rate on each one. For example, credit card debts may have higher interest rates than mortgages. You may want to consider paying high-interest debts first with each paycheque to pay down your balance and avoid accumulating expensive interest charges.
Take calculated risks
At the age of 30, some people have been a part of the workforce for a while, may own a home, or have a family. However, your retirement might still be decades away.
You may be able to afford to take more risks earlier than later in life when your portfolio has a longer time to generate more return on your investments and recover from potential downfalls. It’s important to assess your financial situation and the risk you want to take to ensure you’re prepared for any rewards or consequences.
Save more as you earn more
As you increase your income, it’s important to consider whether you can afford to save more money. Although your expenses may have also increased in your 30s compared to your 20s, there are still many ways to save a few extra dollars.
If you get a raise at work, revisit your budget and your savings plan and increase the amount you set aside each month.
Where to keep your savings
Several registered and non-registered savings accounts provided by financial services providers can help store your funds. Registered accounts include the First Home Savings Account (FHSA), the Registered Retirement Savings Plan (RRSP), and the Tax-Free Savings Account (TFSA). These accounts provide benefits for specific purchases, like buying your first home, planning for retirement, or earning tax-free income from your savings.
Financial providers also have other types of accounts for saving, like savings accounts and high-interest savings accounts (HISAs). They can help maximize your savings by providing returns through interest payments. You receive interest payments based on the interest rate and compounding period. Some of these savings accounts may have no or low monthly fees or minimum balance requirements.
If you want to earn a higher-than-average interest rate on your deposits, consider a high-interest savings account. You can receive a higher interest rate than a regular savings account, which may help you reach your savings goals quicker. With the rise of online financial providers, you can find several options for high-interest savings accounts that accelerate your money growth potential.
The bottom line
You may have already saved more than the average 30-year-old, but if you have saved less, it’s never too late to create a savings plan. You can start small, based on your current income and expenses, and gradually increase how much you save each month. Even $10 a month adds up over time if that’s all you can afford to save right now.
Here are a few tips to save more money at 30:
- Prioritize an emergency fund
- Contribute to your RRSP and TFSA
- Pay off high-interest debt first
- Save for retirement
- Save more as you earn more
Choosing the right account for your savings is important and can set you up for better success. The Neo High-Interest Savings account has a 4.00%¹ interest rate, no monthly fees, and no minimum balance requirements. It’s a great choice for Canadians looking to boost their savings with a high interest rate.
Whether you need a place for emergency savings, want to make contributions to your retirement, or have any planned purchases, the Neo High-Interest Savings account can help make your goals a reality.
Learn more about the Neo High-Interest Savings account and open an account today in minutes.
This article provides information and is not intended to provide any personalized tax, investment, financial, or legal advice. You are encouraged to seek professional advice before making financial decisions.
¹ Interest is calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.
