When it comes to savings and investing, many young people might be tempted to put this off as their retirement years are decades away. But personal financial expert, Suze Orman, would disagree with this mindset. Time and youth are critical keys that young people possess and can be utilized towards a more secure financial future. In fact, Orman says, “The key to their financial independence is their age.”
Instead of coming up with the latest dance moves to feature on TikTok, Orman believes that it’s critical that young people realize that if they start investing earlier, they can gain higher returns. The potential for this diminishes as they get older and wait later to save and invest their money. Suze Orman believes that 30 year olds are also still young enough to take advantage of compound interest. Compound interest enables your money to grow faster because you earn interest on the initial investment plus the interest you already have earned. Read on to discover 10 quotes from Suze Orman that every 30 year old needs to hear.
1. “The key to your financial freedom in the future is investing when you are young.”
- Being young means you can ride the ups and downs of investing.
- Youth can help you absorb more risk.
- Small amounts of money now can mean significantly more in the future.
Key Message: Begin Your Investment and Saving Habits Now.
Thirty-year olds could be in the right financial position to purchase homes and start families, certainly limiting any extra income. However, Orman advises that once all financial commitments are met, having some play money left, they should consider setting a small amount to the side for investments. In fact, there are some investment apps that can take your spare change and apply it to an investment portfolio.
2. “I would much rather see you invest a specific amount of money when you are young, a lesser amount of money, than waiting and have to invest five or six times as much when you are older.”
- By waiting, you also miss out on potential money growth
- You can reach your financial goals with a small amount of money today.
- The power of habit
Key Message: It’s About Consistency, Not The Amount
When it comes to any discipline, it’s about learning as much as you can and proceed to take action, even in a small way. Slow and steady investing will yield greater returns in the future, instead of not taking action. The easiest way to get started is to take advantage of an employer-provided 401K. With their matched contributions, you can take advantage of its growth and withdraw it at retirement.
3. “For those people who are under 30 years of age, the main thing they have to understand is what they have on their side is time.”
- Money grows thanks to compound interest
- You can quickly recover your losses
- Can earn higher returns on riskier investments
Key Message: Learn As You Go
As a 30 year old, you still have a few decades of earning to learn as much as you can about investment vehicles that work best for you. From traditional IRAs to investing in the S&P 500, it really comes down to how much risk you are willing to take on and lose along the way.
4. “Time is the most important ingredient in any financial wealth-building strategy.”
- Every year you wait to invest, means a year’s worth loss of compound interest.
- Investments can potentially outpace inflation
- Face the future with more financial stability
Key Message: Compound Interest is Known as “Interest on Interest”
It is no mystery that the investing world is wrought with complex terminology. Mastering it really requires time to get up to speed by learning from other experts in the field. The beauty of starting young is that 30 year olds have many years ahead to dedicate themselves to this mastery.
5. “The main thing I would say is that it’s never too late to start.”
- Even if you did not begin your investing journey early, you can still reach your financial goals.
- Starting later will require more effort and sacrifice
- Begin your investments now.
Key Message: Take Action Today
While some may argue that young people should embark in their investment journey as young as their 20’s, 30 year olds are still miles ahead of, say, their Baby Boomer and retiree counterparts. Building wealth is certainly a long-term game and 30 year olds still have the advantage of time to make that happen.
6. Some money is always better than no money, and the sooner you can begin, the better off you will be.”
- Money always has the potential to grow
- The amount that you begin your investments doesn’t matter
- Take advantage of compound interest.
Key Message: Leverage What You Already Have
Even if you do begin your financial journey with only a modest amount, the beauty of compound interest is that your initial investments can create a type of snowball effect, which means that you will generate a return on both the principle investment and the interest that has already accumulated.
7. Stay/get on track with student loan repayment.
- Pay on time
- Avoid late fees and penalties
- Paying school loans will liberate your income to achieve other financial goals.
Key Message: Manage Your Student Loan Debt Responsibly
According to the Education Data Initiative, student loan debt reached a staggering $1.727 trillion. This eye-watering number clearly shows that young people’s earnings are being held hostage by these debt commitments. Orman advises that a strategic plan must be in place to pay these loans off as soon as possible and continue to set some money aside for emergencies and for investing.
8. Spend wisely on needs.
- Differentiate between wants and needs
- Spend only on the essentials that help you survive, yet comfortable
- Wants are not critical to your survival
Key Message: Be a Savvy Shopper
When it comes to needs, it’s quite clear that people need these essentials to survive, like housing, food, and clothing. Wants are non-essentials that we don’t need. This can include dining out excessively, buying pricey tech gadgets, as well as clothing. It is critical to create a budget and track spending, ensuring that you know where your money is going so that you can change course and put your money to better use.
9. Set up automatic savings for an emergency fund.
- You don’t have to remember to put your money in savings
- No need for willpower, automation takes care of this action
- Mitigates impulse purchases
Key Message: Automation Takes Decision-Making Out of the Equation
With banking technology and apps making it easier to move and manage our money, automation is another strategic tactic that essentially tells our money where to go. No more missed or late payments, late fees, and missed opportunities for investment. With a proper setup, you can ensure that all your financial commitments are met as well as helping you build your nest egg for the future.
10. Open a Roth account for retirement.
- Offer unique tax advantages
- Offer flexibility
- Contributions grow tax-free
Key Message: The Ultimate Long-Term Investment
Orman advises that users of Roth IRA’s contribute as much as they are able to their account. Although she certainly respects if funds are limited, she cautions users to think about what their present contributions today will mean for their retirement next egg tomorrow. If some sacrifices can be made today, it could provide more stability in later years.
Why This Matters
The beauty of being in your 30s means that you have had many years of exploring the latest in technology. With more technological advances, the knowledge gap typically found in investment strategies is beginning to close. Investment apps are making investing easier and more accessible, making it possible, more than ever, for 30 year olds to learn more about saving and investing. If you would like to know what personal finance guru Dave Ramsey has to say to 30 years olds about money read here.
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