This is the second in a five-part series on financial decisions to make in different decades of your adult life. The first blog addressed the issues most relevant to those in their 20s. Now we move on to the subjects that are likely pertinent to adults between the ages of 30 and 39. If you missed the first post, we recommend you review it first to understand our assumptions and be sure you’ve taken action on the items we mentioned there.

As we noted previously, these blog posts are intended to help you achieve a secure long-term future. We don’t think good financial planning means not having any fun. That’s important throughout your life. But you do want to achieve a balance, particularly in your 30s when life is likely getting more complicated. Here are some suggestions on making the right moves during this decade.

Buy Term Life Insurance

Life insurance is not an investment, and we don’t recommend buying any insurance products that describe themselves as such. Term life insurance is intended only to provide cash if you or your spouse dies. As such, it should only be designed to protect the survivors from large liabilities – current and future – such as mortgage payments, existing college loan repayments, or future college expenditures. It is not to serve as a complete income replacement for the deceased contributions. Rather, it allows the surviving spouse to take some time off and not have to rush to go back to work. You can keep the term life insurance payments lower by not over insuring and acquiring it when you’re young.

Watch this video for a short explanation of life insurance:

Save For Retirement Before Saving For Your Children’s College Educations

As was the case with the retirement vs. college debt issue we described in the first blog, saving for retirement takes priority, but for different reasons. Once you retire, you won’t be able to borrow money to cover your expenses. (Yes, reverse mortgages are an option, but not one we recommend.) Conversely, student loans and scholarships are available that can help mitigate the cash outlay for college tuition and housing.

Think of this as a variation of the airlines’ advice to put your own oxygen mask on first, then your children’s. You don’t want to set up a situation in which you reach retirement age and become a financial burden for your children. Set aside enough money to allow each of you to achieve financial independence.

Here is more on why we recommend prioritizing retirement savings over college savings:

Consider Setting Up a 529 Account and Funding It Early

If your budget allows, consider funding both your retirement account and a 529 educational plan for your children. Both of these investments grow tax-free, and the earlier you fund them the larger they’ll be when it’s time to use them. Ideally you would have enough money to put a lump sum in the 529 plan soon after your child’s birth. If not, allocating a smaller amount at regular intervals – the dollar-cost averaging principle – is a wise approach. Also, don’t be afraid to be aggressive with your 529 investments in the early stages because you’ll have time to take on the greater risk they represent.

This video breaks down the advantages of a 529 and why we think they’re a good idea:

Examine Your Housing Costs and Consider Buying a Home

Mortgage rates and housing prices have changed rapidly recently, with significant variations in markets depending on your location. As such, you may be more nervous about purchasing a home now than a couple of years ago. But rents have increased, too, so you may want to pencil out the monthly costs of renting vs. owning and see if now is the right time to buy your own home. Mortgage payments still are tax-deductible, which is a significant advantage in terms of reducing overall costs.

A few caveats: Don’t buy if you’re uncertain about staying in your current area for more than a couple of years. The costs of closing can wipe out the savings you gain. Also, don’t buy a home as an investment vehicle primarily. Rather, think of it as a better use of money you would otherwise need to use to keep a roof over your head. And finally, don’t buy a house beyond what you can afford with the thought of its growing in appreciation. Many people made that mistake during the housing bubble of 2007-08. When the bubble burst, their homes were worth less than what they paid for them, leaving them “upside down” in their mortgage payments.

Set Up A Will and Consider a Trust

It may seem premature in your 30s to think about your estate, but if you have children, it may make a difference to their futures if you’re suddenly not around. A will determines who receives your assets, but without a trust, those assets may not be put to use as you would have preferred. An 18-year-old potentially could receive his entire inheritance all at once and not have the maturity to handle it wisely. A trust could parcel out the amounts he would receive at different ages and what it can be used for to minimize the risk of wasteful spending. Additionally, you would help your survivors avoid a lot of potential stress and acrimony by naming your children’s guardians and backup guardians in the will rather than having them sort it out after your passing.

This video lays out the elements of estate planning, but as mentioned, you should contact an attorney for advice tailored to your circumstances:

Lake Road Advisors, a Fee-Only, independent financial planning firm with offices in Corning, NY, Ithaca, NY and Portland, OR works with clients virtually all across the country. Paul Sydlansky, the founder of Lake Road Advisors LLC, has worked in the financial services industry for 20+ years. Prior to founding Lake Road Advisors, Paul worked at Morgan Stanley in Manhattan for 13 years. While at Morgan Stanley, Paul was a senior-level manager within the Institutional Equities Department. In 2018 he was named to Investopedia’s Top 100 Financial Advisors list. Paul received a Bachelor’s degree in Economics from Marist College and holds an MBA from New York University Leonard N. Stern School of Business. Paul is a CERTIFIED FINANCIAL PLANNER™ and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network (XYPN).