People in their 30s tend to feel invincible. You’re not a kid anymore and you’re technically not an adult yet per se either. That said, growing old is mandatory while growing up is optional. Therefore, these young adults tend to live life to the fullest without worrying too much about their finances. This kind of behavior will eventually come back to haunt you. One financial problem can easily lead to another, and before you know it, you’re spiraling down into crippling debt. Now, no one said you must refrain from enjoying life before the kids and the full-time job comes into play.
However, if you’re going to do so, you should at least be smart about it. In other words, avoid making common mistakes that people in their 30s usually make and you’ll be fine. That may be more difficult than it seems but it’s achievable. With that in mind, here are a few financial mistakes you should avoid in your 30s.
Budgeting is for people who overthink their finances too much, right? Wrong. Budgeting is for everyone, unless you want to live care-free for a couple of months before debts start creeping into your life. You know that old saying: a good offense is the best defense? Simply put, preventing financial mistakes, to begin with, is the best way to deal with them and budgeting can help you do that. Neglecting budgeting leads to overspending and overspending means crippling debt, it’s as simple as that. Moreover, budgeting allows you to assess your finances. For instance, with budgeting, you can determine just how much you earn, how much you must pay for expenses and necessities, and how much are you left with once that’s said and done. This will give you a perspective into the bigger picture. You can easily see where you overspend and where you can cut costs to have more money left over to do whatever you want with it.
Not thinking about the future
The future will come, whether you like it or not. It may seem pointless to you to think about it now but know that if you don’t start as early as possible, the future won’t be as bright as you’d hoped it to be. One thing, in particular, you should be concerned about is your retirement. Here’s a hypothetical scenario. If you want a solid retirement, you need to allocate a percentage of your salary to your retirement accounts (IRA). While employed, your employer should match your contributions (401(k)). However, you can access these funds when you reach a certain age and you’re ready to retire. But, should you experience an injury or disability that will prevent you from working any longer before reaching that age, those funds won’t be accessible to you. That’s when you’ll need the services of superannuation lawyers to fight the case for you. The moral of the story – anything can happen in the future and you must be prepared for it.
Plastic is fantastic
Every person in their 30s uses a credit or a debit card. After all, it’s more convenient than carrying cash with you and you can buy some nice things by going over the limit, but just this time, really. That “just this time” can multiply considerably based on your lifestyle. The more you go over the limit, the more your debt increases. But that’s okay, you only need to pay the minimum monthly payments on your card and you’ll be fine. Wrong again. Paying the bare minimum increases and prolongs your debt through high interest rates and it can even seriously damage your credit score.
Who cares about the credit score?
Now, a credit score is something every person in their 30s knows exists and that it affects your personal finances in some way but more often than not, they don’t pay much attention to it. A credit score determines your creditworthiness in the eyes of lenders, such as banks. Bad financial habits can ruin your credit score and a credit score in the negative can have dire consequences for your financial health. The more you neglect your credit rating, the more financial problems you’re going to have. However, a bad credit score is also something of a warning to you, a red flag if you will. Unless you improve your financial habits so that you can improve your credit score, your financial health will only deteriorate further. Therefore, improving your credits score will help you learn how to budget and spend wisely in the future.
Making a financial mistake is easy, whereas fixing the problems that mistake caused is a lot more difficult. Being aware of the consequences is crucial in understanding how to maintain your finances and how to avoid mistakes, to begin with.
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