By: Andrew Latham, SuperMoney
Everybody expects you to mess up during your roaring 20s. After all, you still have time to set things right. Making money mistakes when in your 30s is another matter altogether. Financial blunders in your 30s can haunt you for decades to come. These are the most common mistakes people make in their 30s that affect them during their 40s and beyond.
Spending Too Much on Your Kids
While it is okay to give your children a treat from time to time, many of us get carried away. In the United Kingdom, parents spend an average of $438 a year on toys alone for every child. For a family of three, that adds up to over $1,300. The US is only slightly behind, with an average expenditure of $371 per child. Reduce your child’s toy budget and start a college fund instead.
Getting Married Without Talking About Finances
Arguing about money is by far the top predictor of divorce, according to a study at Kansas State University. This is particularly true with couples who argued about money early in their relationships. Money may not seem like the most romantic subject to discuss when dating, but it pays to talk about finances with the person you plan to live ever after.
Long Term Consumer Debt
There is always a reason. “If only I were single, I would have paid off all this debt” or “I was paying off my debt, but we had a kid.” Nobody is saying it’s easy, but now is the time to be saving for your retirement not paying off yesterday’s splurges. Take charge of your debt now! Try consolidating your debt with a low-interest personal loan or a 0% APR balance transfer credit card. SuperMoney has a useful credit card search engine that helps you filter for the credit card features that matter the most to you.
Keeping Up With The Joneses
People of all ages spend money they don’t have to try to impress people they don’t like, but it seems especially common among 30-somethings. Be smart. Spend on things that truly matter to you. Live within your means, create a financial plan, and stick to it.
“Forgetting” to write a will
Nobody likes to think about dying, especially when you’re “only” in your 30s. However, if you have a significant other or children, please make out a will or set up a living trust. You don’t want your loved ones to go through the hassle of fighting the State for what is theirs. While you’re at it, get a durable power of attorney too!
Not Having Enough Life Insurance
Again, it’s not pleasant to think about death; but what will your loved ones do if you’re not around to take care of them. If you have anyone that depends on your income or care, you need life insurance. And you have to get enough life insurance to cover the needs of your dependents, not just the minimum offered by your employer.
Not Re-evaluating Your Retirement Goals
Retirement is a moving target. What seemed like enough 10 years ago may not cut it today. Life expectancy is increasing, as are medical costs. You may also have become accustomed to creature comforts you didn’t care about when you were younger. If your income has increased since you formulated your retirement goals, reassess your retirement plans and ensure it still meets your requirements.
Not Paying Attention To How Your Investments Perform
When it comes to investments history means nothing. You need to stay on top of your investment funds and ensure they still represent your goals and risk tolerance. If you need help, now would be a great time to find a fee-only wealth management advisor and see if you are on the right track.”
Not Saving For Your Child’s Education
The average cost of tuition and fees for the 2015-2016 school year was $32,405 at a private college, $9,410 for public colleges, and $23,893 for out-of-state students attending public universities. That is over $130k for a 4-year program. Imagine what it will cost by the time your little ray of sunshine finishes high school. Start a college fund today and consider a 529 savings plan.
Not Diversifying Your Income
“It used to be that once you got a good job, it was for life. That just isn’t the case today. We need to find ways to maximize and diversify our income. If you have a hobby that can make some money, pursue that. Try to generate revenue from sources other than your job. At the very least it will earn you some extra spending (or saving) money.” Your portfolio is another area where diversifying is a protective measure. Check out these wealth management companies for easy methods to diversify your portfolio.
Overspending On A New Career
If you thought training for your career was expensive, try doing it twice. Many workers in their 30s find they are no longer as excited about their careers as when they started. Starting a new career may sound like an enticing adventure, but don’t underestimate the cost of starting all over again. This is a typical mistake that can drown you in debt. If you don’t monitor the finance rates on your credit cards, you can easily encounter problems. In just a few years, it’s easy to rack up $100k in debt. Debt is not just bad for your bank’s account health either. A recent Gallup survey found that as student debt rises, physical well-being declines.
Starting A Family Without A Plan
Getting married and having children aren’t purely financial decisions, but they shouldn’t be made without consideration of how they will impact your household’s bottom line. The average family will spend over $26k during the first year of a baby’s life. That’s a chunk of change. Being a parent can be stressful enough without the added burden of financial shortfalls. You might want to delay having children to set more money aside for retirement or shore up your finances.
Ever wondered why we have babies? This article looks into the economics of baby-making and why we are gluttons for punishment when it comes to parenthood.
Not Talking To Your Parents About Money
Being independent is all very good. But not talking to the rest of the family about finances can be an expensive mistake. Parents of 30-somethings might be able to share useful financial wisdom. Also, some 30-year-olds may believe that they are in line for a big inheritance or that money will be coming from their parents to help pay for their children’s college expenses. However, without actually discussing these issues, they may be setting themselves up for an unpleasant surprise.
Failing To Take Budgeting Seriously
There is no reason to allow your bad budgeting habits to define your future. If annual budgets are too intimidating for you, start small. Look at your paycheck and plan how you will spend (or invest) every dollar. Learning how to balance your family’s budget will protect your family from financial problems and improve your health. Money is the main cause of stress in the United States. Just knowing where your money is going will give you a sense of control. You’ll sleep better, stress less, and feel happier. Not good at managing money? These money management tools can help.
