You can slip financially at any age.
The good news is that financial setbacks are recoverable. Step one: Identify the hurdles you're most likely to encounter at your age, and then take steps to handle them if they come up.
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In your 30s, for instance, you don't have to worry about not having saved enough for retirement. But you do have to worry about some other pitfalls.
The top three wrenches for people in their 30s are job loss, not earning enough money and bad financial decisions, according to an Ameriprise Financial study. The asset manager surveyed more than 3,000 Americans ages 30 to 79 with at least $100,000 in investable assets to identify their financial stages and challenges.
Now that you know the risks, here's how to plan so you're safeguarded.
1. Be prepared
"It's no surprise that job stability can create some anxiety, said Marcy Keckler, vice president of financial advice strategy at Ameriprise.
Shore up your financial situation with an emergency fund. Keckler recommends having at least three to six months' worth of living expenses saved up. It doesn't need to be in cash, but use an account that would allow quick access to the funds.
"Most people aren't as secure as they think," said Rob Cirrotti, head of investments and managed account solutions for Pershing. "Make sure you continue thinking about ways to develop and grow." Stay at the top of your game, career-wise, and consider taking a new course or two, or learning a new skill.
Budgeting also doesn't get enough attention, Cirrotti said. Few people have an actual budget, which can do so many things: It helps you reduce debt and build a rainy-day fund so you can deal with unexpected events, and it's a great way to get some discipline.
2. Diversify, diversify, diversify
Your top priority? Saving for retirement. But be sure your investments are diversified.
A diverse asset allocation — your investment mix — means you'll be able to take advantage of different market conditions, Keckler says.
"Diversification can also help you feel confident that your investments are prepared to weather the storm in times of market volatility," Keckler said. "You'll want to keep your short-term and long-term financial goals in mind."
Learn to balance by keeping enough funds and savings on hand to live the way you want to while stashing enough so you can do that in the future.
3. Risky business
Remember, you've got time on your side.
Risk is really about personal preference but at this age, Keckler says, it's OK to have some investments that lean toward being more aggressive with greater opportunity to grow over time.
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Only when you're nearing retirement age and want to rely on income from investments should you think about revisiting your tolerance for risk. That's when you might potentially think about dialing down the risk level in your portfolio.
4. Hands off your 401(k)
That retirement savings account is for your future retirement.
"If you borrow from it or take money out early it defeats this purpose," Keckler said.
Need to pay for education, a house or car? You can take out a loan for those expenses, but there is no loan for retirement.
A quarter of people in their 30s who borrowed against their 401(k) said they did it to buy a house, according to Keckler. Another quarter borrowed to pay down debt. "If you need to borrow from your retirement savings for a purchase, it could be a sign that you are not living within your means," Keckler said.
Borrowing from your retirement account means missing out on the chance to make that money grow, setting back your savings efforts. If you're unable to repay the loan, it will be treated as a withdrawal. You'll have to pay income tax on it, as well as the penalty for the early withdrawal.
5. Don't sweat the stock market
If you've been paying attention to the stock market this month, you may have noticed some volatility — in fact, "quite a bit," as Keckler put it, "which people in their 30s might not have experienced if they started investing during the bull market."
Keep calm. "During market swings, always keep your long-term plan in mind," Keckler said.
Don't let your emotions push you to make decisions in the heat of the moment. "That's when many people end up locking in losses," Keckler said.
Instead, look for help. Consult a financial professional or a trusted source of financial information or help in sticking to your goals and developing a solid plan.
Consider what products might protect you, from life and disability income insurance to making sure you have adequate health insurance. "Review your auto and home insurance coverage, and consider renter's insurance if you don't own your own home," Keckler said.
