Burnt smell from clutch when im in 3rd gear - 1989 Volvo 240

It sounds like the clutch is close to being worn out as the pressure plate is not gripping the clutch plate with sufficient force when power is applied. Before you consider replacing any thing, first check the clutch free travel adjustment because as the clutch plate wears the free travel does decrease and if there is no free travel, then there will be some releasing action on the pressure plate allowing cluth plate slip. Hydraulic setups are usually self adjusting but you should check the free travel of the clutch pedal which should be about 3/8 to 1/2 inch measured at the pedal rubber. This is done by adjusting the push rod that links the pedal arm to the piston in the master cylinder. Adjust by first loosening the locknut on the rod at the end where it attaches to the pedal arm and turning the rod in either direction to obtain the correct free travel. One adjusted retighten locknut.
For a cable setup there should at least 1/8 inch of free travel of the cable before it starts to move the clutch fork on the outside of the bell housing. To adjust, hold the operating fork so that the release bearing is touching the fingers of the pressure plate. You will need to turn the cable adjuster so there is only about 1/8 to 1/4 inch of free travel of the cable where it attaches to throw out fork before it starts to move the fork when the pedal is depressed.
If all adjustments are correct and clutch is still slipping then the pressure plate diaphragm spring has lost its tension and /or the clutch plate has worn down to the rivets. Either way you will have to do a complete clutch rebuild.