Practical tips for building wealth in your 30s and 40s

For most people, their 30s and 40s are the most financially demanding decades. You may be paying a mortgage, raising a family and working hard to keep up with the rising cost of living.  

You may have that nagging voice in the back of your mind telling you that you need to set yourself up for the future. This often feels as though you must pick between a comfortable life now and making never-ending sacrifices for a distant future.  

But I believe there is a better way - one that doesn't make you miserable for decades before you finally reap the rewards.   

As a financial planner, I've seen too many strict budgets fall apart because the plan was simply not realistic. Instead, I prefer a balanced approach that lets you have a degree of freedom to enjoy life, while also building a solid foundation for your future.  

Here are my tips. 

Work out your 'why' 

The first step is to understand your 'why'. Do you want to build wealth because you'd like to work one less day a week, give your kids a head start, travel more or change careers? Clarifying your why will drive what you do and how you do it.  

Decide on your wealth goals 

Once you understand your why, it's time to set specific goals. It's not enough to say, "I want to make more money." Your goals need to be SMART: specific, measurable, attainable, relevant and time-bound. For example, I want to have $20,000 in annual passive income in five years so I can work four days a week.  

Sketch out your 'RICH Trifecta' strategy  

Next, devise a solid strategy to move from where you are now to where you want to be. Most people try to build wealth in sporadic moves: they buy some shares here, some crypto there and start a side hustle that's more work than income.  

Instead, I advocate for a unified approach to wealth building, which I call the RICH Trifecta. This is a trio of property, shares and private business, assessed through the four lenses of Risk, Income, Capital, and Hassle.  

Each investment does a different job and has its own strengths and weaknesses, but together they can form a wealth-building powerhouse.  

For each investment ask yourself:  

• What could go wrong?  

• What income might it produce?  

• How much capital will it require?  

• How much effort and hassle will it demand?  

You don't need to own all three within the next week. If buying your first home is a priority, work on getting a loan and coming up with a deposit. If you have surplus cash flow, maybe consider getting started with shares. If you have useful skills and extra time on your hands, think about what side hustles you may be able to kickstart.    

Use smart tactics 

Some of the most effective wealth-building tactics are simple and boring. One tactic you can start using right now is setting up a regular investment plan through what's known as dollar-cost averaging.  

This is where you set a specific amount that is automatically invested in the share market every week, fortnight or month. By investing regularly and staying invested over time, the power of compounding can tilt the scales in your favour. 

Another simple but powerful tactic is paying yourself first. This can come in many forms, from directing your pay into a high-interest savings account to making additional payments on your mortgage. 

The same principle can apply when you receive a bonus or pay rise: decide in advance how much you will save and where you will put that money, whether that's towards your mortgage, a savings account or investments. 

Another idea is to implement a 24-hour rule for unplanned purchases. You may feel less of a need for that shiny new gadget once you've had time to think about it. This simple tactic has saved me thousands over the years.  

It can also be useful to review three months of transactions and identify one recurring expense you'd barely miss. The budgeting tools built into most banking apps can help you monitor where your money is going. 

Protect what you're building 

Protecting wealth is just as important as building it. Two practical ways to do this are to keep an emergency fund and review your insurance. 

An emergency fund can help you cover unexpected expenses without having to dip into your investments or take on debt. 

It's also worth reviewing your insurance. I find many clients have policies inside super they're not aware of. Check what life, TPD and income protection insurance you already have, then consider whether the level of cover suits your current income and needs. Seeking professional advice can also help you work out whether you have the right cover for your circumstances.   

Bringing it all together 

Set some time aside to choose a meaningful goal, automate your savings, check your transactions and review your insurance.  

Building wealth does not have to come at the expense of an enjoyable life. It's all about replacing financial stress with greater clarity, realistic goals and a clear strategy.