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Why you should be saving in your 30s

Are you in your 30s, or on the brink of turning 30? Have you started investing? Here we look at why future you will thank you for making the decision to invest, today.

Approaching the 30 year-old milestone can be intimidating. When you’re in your 20s you’re young, taking time to find your feet, forging a career, dating, renting, saving for that first deposit. But when you wake up in your 30s you might feel as though it’s time to take control of things and start saving some of those well-deserved earnings for those long-term goals, and that likely means investing.

Yet despite this, many people in their 30s are still pushing the concept of investment to the sidelines. As a result of this, those in this age bracket have half the wealth that those now in their 40s had a decade ago.

A recent study by the Institute of Fiscal Studies (IFS) revealed that compared to those born ten years earlier at the same age, those born in the early 1980s have no higher take-home incomes. They were also found to have not saved more, are less likely to own a home, and have a lower pension.

Why have you stopped saving?

But why are people in their 30s saving less than ever before? Whilst there are many benefits for this generation, including better health, improved technology, longer life expectancy and cheap travel, to name only a few, 30-somethings are still late to the investment game.

Perhaps in recent years the state of the economy and UK’s recession will have had something to do with this by impacting on both levels of pay and unemployment rates. Outside the public sector, those in their 30s now rarely have access to the defined benefit pension schemes that previous generations had at the same age.

In addition to this, younger generations are now expecting to inherit more wealth, which, according to the IFS report, is the main reason they still hope to be better off than their predecessors in retirement.

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Generation rent

Traditionally, buying a house has been regarded as one of life’s main goals, but we are seeing the emergence of a generation of young adults, who (partly because of high house prices) are choosing to rent rather than buy. This generation are much more career focused and also prefer the flexibility of moving around the UK as and when their career suits.

Personal finance correspondent Simon Gompertz, believes that there is little sign of this situation changing. He thinks that the worst-case scenario is the thought of this generation reaching old age, still renting, with little savings and turning to the state for support.

Campbell Robb, housing charity Shelter’s chief executive, said: “With sky-high house prices so out of step with average wages, it’s no wonder a whole generation are being priced out of a home of their own and left with no choice but expensive, unstable private renting.”

How to start saving

If renting suits you, you don’t need to buy property. However, if you’re earning you should be investing. Saving has long been touted as beneficial, and if the recession taught us anything, it was the importance of a rainy-day fund. But if you’re looking to the future, investing those savings can create a powerful compounding effect, that can pay off in the long-term. Investing isn’t just for retirement, although that’s important, think of those goals in you have for your 40s, that potential family that might like to go on holiday to Disney.

If you’re not paying into a private pension, you can start, and most employers may have already enrolled you into one that you’re not aware off. The more that you put into your private pension, the more the government and your employer will and even a small amount each month can go a long way.

Investing doesn’t mean you have to take out a book on the financial markets. There are companies, like Moneyfarm, designed to make investing simple and efficient. With Moneyfarm the only decision you need to make, is the one to invest. A team of experts will then manage your portfolio for you. You’re 30 now, grown-up, responsible, can you really afford to ignore your future?

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