5 Money Management Skills To Master By Age 30

There’s no disputing the importance of developing money management skills in this day and age.

There are various milestones in our lives that call for large expenditures such as buying your first home, getting married, starting a family, continuing education, retirement, healthcare, and more.

To position yourself for success, good personal finance habits and a sound working knowledge of the key money management fundamentals are best developed as young as possible.

It might sound like a minefield, but it’s possible to manage your money smartly once you’ve mastered a few key principles and habits. Managing your money properly means making informed choices around saving, investing, spending and taxation.

Here we’ve outlined the 5 main money management skills to master by the time you turn 30 (but late is better than never!). Keep reading to learn more.

5 Money Management Skills To Master

money management

#1 – Planning and goal-setting 

Fail to plan, plan to fail as they say, so therefore, the first step towards mastering personal money management is planning – i.e, understanding your goals, your income over time and your expenses. Essentially, you need to look ahead to identify any major expenses in your timeline and work backwards from there.

Start by setting goals. Whether short-term, medium term or long-term, clearly identifying your goals will help you achieve what you want to do. It’s quite simple: setting a goal of buying a home in the next 5 years will illustrate that you need to save X amount of money by X date.

Once you’ve identified the goals and timeline, start by putting aside a percentage from your earnings every month that will get you there. Ideally, you’ll have a strategy in place for boosting these savings ie through investment in another asset class.

#2 – Investing

The second step towards mastering personal money management is investing.

It’s generally beneficial to invest as much of your income as possible to help you reach your goals faster. The general rule to investing is higher risk equals higher reward and vice versa.

Before making any investment, spend time educating yourself on the inherent risks and issues that could affect your capital. If you’re looking to invest in equities or listed securities (ie stocks and bonds, ETFs and so on), make sure you do your research first.

Whilst past performance is not a reliable indicator of future performance, you should understand how the investment has fared over the years and make a judgement on where you think it’s headed.

It’s also very important to diversify your investments (do not invest all of your savings in one investment only), to avoid additional risks.

In summary, when it comes to investing, start by determining your risk appetite and make investments that fall within it. For instance, if you are risk averse, avoid high risk investments or make them only a small part of your portfolio.

However, your risk appetite also needs to be balanced against how quickly you would like to reach your financial goals. Given the risk/reward trade-off mentioned earlier, investing in lower risk assets will generally mean you will not reach your financial goals as quickly.

#3 – Understanding asset classes

Broadly, assets are considered either defensive or growth assets.

As the name implies, growth assets are those who investors believe will grow in the future – technology companies, retailers, and other ‘demand-driven’ companies are examples. These also typically have a higher risk-return ratio.

Defensive assets are those that are more likely to preserve wealth or protect against down-trends. Because of the perennial demand for their products or services, defensive investments tend to perform better in a declining market. Healthcare, utilities, consumer staples, are thought to be ‘defensive’ because people need them no matter what the economy is doing.

Within these 2 categories, there are different asset classes – for example, high interest term deposits, property, equities (shares), government bonds, alternative investments such as NFTs and crypto currency, gold and precious metals are all examples of different asset classes.

When considering what asset classes to invest in, consider whether they are high or low risk, the estimated investment timeline required, whether the investment is relatively liquid (cash) or illiquid (property), as well as any tax implications.

Ideally, the best assets are those that are most likely to appreciate in value while being easy to maintain and cash-out of.

#4 – Allocating your portfolio 

Depending on your personal circumstances like your age, your investment goals, and appetite for risk, it’s time to allocate the assets in your portfolio.

For instance, if you’re more risk averse, then an investment in real estate is considered less volatile than stocks. Therefore, you may decide to allocate a larger portion of your portfolio to this asset class.

Conversely, if you are happy to take on a higher level of risk, then your portfolio might be weighted by shares or alternate asset classes.

Whilst you are building your know-how around investment decisions, you may want to seek professional advice from a financial planner when it comes to allocating assets in your portfolio.

However, irrespective of having a professional opinion at your disposal, you should take the time to educate yourself about investing and money management so that you can really get a handle on things yourself and proactively design your own long term success.

#5 – Taxation

Truth be told, you can make all of the best investment decisions in the world, but if you do not understand the taxation system in your country, you are at a huge disadvantage. Tax has a large impact on how people and companies build wealth.

For example, given that investment income is subject to tax at your marginal tax rate, you will pay tax on profits you make from dividends, interest, capital gains, rent from property and sales of other assets.

In most countries, there are exemptions and tax treatments available that allow an individual to reduce their tax payable. In Australia, for instance, capital gains can be reduced by 50% if the asset was held for more than 12 months!

There’s a lot to know when it comes to tax and investments, so it’s worth building this knowledge for yourself, or hire a tax accountant to maximise your profits.

#6 – Tracking progress

A ‘set and forget’ mentality is probably not going to yield the highest returns when it comes to investing. Sure, you can select a couple of low-maintenance, long-term assets to invest in, but in reality, investing and money management is just that – it’s management.

Therefore, make a habit of reviewing and tracking of your investments regularly. You may find it’s wise to swap into a new term deposit with a higher rate of interest, or another stock that is paying a more attractive dividend.

Things change all the time, and the investor who sits idle by the sidelines will almost certainly under perform in the long run.

Some people also recommend drawing up a personal balance sheet which they check regularly. You can also use one of the many personal finance apps that help you keep abreast of everything from financial news to your personal budget.


When it comes to money management, it’s never too late to start paying attention. By understanding the basics of planning, investing, asset allocation and taxation, you are on the road to managing your money proactively and leading a financially-secure life.

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