4 Smart Steps to Grow and Protect Wealth in Your 30s

We get it. You’re busy. You’re pre­occupied with raising your children, holding on to a demanding job, and maintaining your sanity during your daily commute. But it pays to take time to nurture your long-term wealth.

Buy a house (if it makes sense). Owning a home is the American dream. Growing home equity is also a key to long-term wealth. But before you buy, make sure you plan to stay put long enough to recoup the up-front cost of getting a mortgage and the back-end cost of selling your home.

Generally, you should stay in the home for at least five years, but there are exceptions depending on where you live. In Toledo, for example, buying is usually cheaper than renting even if you move after two or three years, says Ralph McLaughlin, economist for Trulia.com, a website that provides home-value data. An analysis by SmartAsset, a financial website, found that in Philadelphia, Baltimore, St. Louis and Dallas home buyers break even in less than four years. Trulia offers a calculator you can use to compare the cost of renting versus buying in 100 metro areas.

A higher down payment—-say, 20% or more—-may tilt the scale in favor of buying, and the higher your tax rate, the more you’ll benefit from owning a home because you’ll get a bigger tax break from the mortgage-interest deduction. But as mortgage rates rise, the scales start to tilt toward renting.

Save for college in a 529 plan. Few expenses will deplete your wealth faster than a big college tuition bill—or two. So even though you have lots of other demands on your paycheck, you should start socking away money for college as soon as your kids are born.

For most families, a 529 college-savings plan is the best way to save. Most plans have low minimums—$25 a month or less, says Joe Hurley, founder of Savingforcollege.com. College 529 plans are sponsored by 48 states and the District of Columbia. Your investment grows tax-free, and earnings are also tax-free as long as the money is used for qualified college expenses.

You don’t have to save in your own state’s plan, but two-thirds of states sweeten the pot with tax breaks. These tax deductions can be generous, particularly if you live in a high-tax state. New York, for example, allows married couples filing jointly to deduct annual contributions of up to $10,000 from state taxable income. Many employers let you contribute through payroll deduction, and a few will even match your contributions. Nevada and Illinois provide a 25% tax credit to employers that match state 529-plan contributions, up to $500 per employee.

If you live in one of the nine states with no income tax, or your state doesn’t offer tax breaks for contributions, look for a plan with a strong investment record and low fees.

Buy life insurance. You need life insurance as soon as anyone depends on you financially. That could be when you get married, but it’s a certainty when you have kids.

Calculate how much money your family would need to cover their expenses and save for college and retirement without your income. Buy at least enough insurance to cover seven to 10 times your gross income, or more if your earnings are rising or you plan to have more children. Nonworking spouses need insurance on their lives, too, to pay for child-care and other expenses. We like the life insurance calculator at LifeHappens.org for a more precise figure.

A 20-year term insurance policy may be long enough to see your kids through college, but a 30-year policy can be worth the extra money if you want coverage to last until they are on their own and, say, your mortgage is paid off. A healthy 35-year-old man can buy a $500,000, 20-year term policy for about $260 per year; a healthy 35-year-old woman would pay $235, says Byron Udell, CEO of AccuQuote.com. A 30-year policy costs about $460 per year for the man and $390 for the woman. Make sure the policy lets you convert to a permanent policy in case you end up needing coverage for longer than expected and your health changes.

Invest in yourself. In this disruptive world, it’s dangerous to become complacent about your job. Consider this sobering prediction from the World Economic Forum: More than 5 million jobs worldwide will be lost by 2020 because of robotics, artificial intelligence and other technologies. Plus, “someone else is coming up behind you who doesn’t have the distractions of home life and kids and a spouse,” says Robin Reshwan, founder of Collegial Services, a career counseling and staffing company.

Just as you need to diversify your investments, you should diversify your résumé, Reshwan says. That doesn’t necessarily mean you need to get an advanced degree or change jobs. Talk to your manager about steps you can take to learn new skills and improve your value to the company.

This is also a good time to take stock of how much you’re worth. Review openings on LinkedIn for jobs that are similar to yours to get an idea of what other employers pay someone with your skills, Reshwan says. Indeed.com, a job-search website, provides another source of information about how much your peers are earning. It’s also a good way to see how much demand there is for someone with your background and abilities.

Sandra Block is a senior associate editor for Kiplinger's Personal Finance. .