In the process of achieving those goals, however, many 30-somethings make a number of financial errors that cost them for many, many years to come. Here are six of the worst mistakes.
People in their 30s often continue to carry credit card debt. A credit card can be a useful tool for shopping, but if you can’t pay off the balance in full each month, you’re making a big mistake. That credit card debt will hang over your head for years, draining your finances steadily. A $1,000 balance on a typical credit card, if paid down only using minimum payments, will end up costing you more than an additional thousand dollars in interest.
People in their 30s often skip diversifying their income. It’s easy to focus on your primary career and invest all your time and energy in establishing a firm foothold there. However, that comes with a pretty severe risk. What happens if your primary employer closes up shop? What happens if you make a major error in your field and burn some bridges? What happen if your career path falls out of demand? You can find yourself shut out of a job in your career with a resume that doesn’t help you at all.
A much better approach is to diversify your income. Spend some of your time starting up a side business that will earn you cash. Start a small landscaping business. Start freelancing. Start a YouTube channel. Write a book. There are many things you can do to earn some extra cash on the side.
People in their 30s often waste money “keeping up appearances” for family and friends. For many, there’s a strong drive to appear successful to the people around you – and even to yourself. That often takes the form of having a nice house and a nice car and nice clothing and nice home furnishings.
The catch is that those things are often expensive, and they’re not a sign of financial success. Those things are often just a sign that you’re spending a lot on a house or a car or home furnishings. It also means you’re not spending a lot on other things, such as eliminating debt or saving adequately for retirement. Your money is instead stuck in possessions that will likely appreciate slowly (your house) or lose value rapidly (your car, your clothing, your home furnishings). That’s a big financial mistake.
People in their 30s often avoid making basic estate preparations. When you’re relatively young, it’s very easy to overlook your own mortality. Many of the ailments and conditions that can end your life early are still far off in the future, after all, so why think about them?
Of course, that’s not true. Many life-changing and life-ending events can happen to people in their 30s, ranging from automobile accidents to illnesses like cancer. Not having a plan in place, such as a will and life insurance policy, that will cover catastrophes is a major disservice to the key people in your life.
People in their 30s often overspend on their children. Being a parent today is filled with lots of temptation to buy lots of things for your children. I’m not even talking about gifts or toys or video games, but things like extracurricular activities, sports equipment, musical instruments, summer camps, trips … the list goes on and on.
It is so tempting and so easy to toss endless amounts of money into these things, but that often comes at the expense of your long-term financial stability. If you’re routinely going into debt to make sure your child has a “great” Christmas or to afford yet another set of uniforms and equipment for a sport your child isn’t strongly interested in, stop and ask yourself whether this spending actually makes sense for you and your child.
People in their 30s often put off saving for retirement. Retirement still seems incredibly far away when you’re in your 30s. After all, there’s still 30 years between 35 and 65.
The catch is that retirement savings is so much more effective when you start saving at a younger age. The earlier you start saving, the more years you give compound interest to work in your favor. For example, $1,000 invested in the stock market at 7 percent interest at age 30 gives you $10,677 at age 65. Investing that same $1,000 at age 45 gives you only $3,870 at age 65. Waiting is the equivalent of throwing away $6,807.
Your 30s are a time to get your financial house in order for the rest of your life. You’re earning a good income and have lots of energy. Plus, there’s plenty of time left for interest to work in your favor. Don’t miss out on this opportunity. It won’t come around again.
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This article originally posted on, money.usnews.com.