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Financial Mistakes to Avoid in your 30's NEW CI Main

Financial Mistakes to Avoid in Your 30s

So, you’ve left the wild 20s behind and entered the sober 30s. Although you have grown and learned much over the past decade, you still have opportunities to take and mistakes to make, some of which may be more costly than others.

You might be considering where you stand in your relationships, your work, your housing situation, and maybe even parenthood. This is an exciting time, but it also calls for careful financial planning. 

With the start of a new decade comes new difficulties, and we’re here to lay out some common money mistakes that can get you into a world of trouble. Here are seven common financial blunders made by people in their thirties, and the solutions to them:

Not planning for your retirement

It feels like retirement is a lifetime away. You’ve taken your initial steps towards a million Rand in earnings or up the corporate ladder. 

Regular savings and compounding, or making little payments that grow over time, are the keys to a comfortable retirement. Make full use of your employer’s retirement plan, including the matching contribution, or start a standard or retirement account and invest regularly.

Not diversifying your savings

You should diversify your investments beyond just your retirement account. One common error is failing to spread out their savings over different investments. Spending on major purchases like a wedding, a house, or a car is common in one’s thirties. 

Consider your long-term and immediate monetary needs after opening a savings or brokerage account. Invest in a wide variety of securities, such as equities, bonds, mutual funds, and cash, to spread out your risk and maximise your liquidity.

Not getting a handle on your debt

Your thirties are a golden age for career advancement. You now have more disposable income and may increase your spending accordingly. Even though you have the financial means to indulge in finer things, doing so is not without risk.

An actual phenomenon, “keeping up with the Joneses”, is tricky – you can’t just walk away from that world once you enter it.

When cash is scarce or you need to make online purchases, using a credit card is a convenient option. However, when you find that you cannot pay it off by the end of the month, it is time to examine your spending habits.

While using a credit card can help you build credit, doing so at the expense of paying exorbitant interest on your purchases each month can have a devastating effect on your finances.

If you need to pay for major bills or consolidate debt, you may want to look into getting a personal loan. Personal loans have a far lower interest rate compared to those of credit cards and might result in substantial savings over time.

Making yourself house poor

You could start thinking about buying a house now that your income has increased. You should have a good idea of how much house you can afford after calculating your monthly expenses and saving for a down payment. 

Don’t forget to factor in PMI (if you put less than 20% down), taxes, insurance, and other costs associated with owning a home. To “afford” the largest property in the most desirable neighbourhood by sleeping on the floor and subsisting on ramen noodles is not a sustainable lifestyle throughout a mortgage. 

If you put all your money into your mortgage payment, you won’t have much left over to put towards retirement or other goals. It’s not something you can simply return, so think carefully before buying. You’ll be much more content in a house that doesn’t cost more than you can afford.

Not getting insurance

When you don’t need it, insurance can seem like a waste of money. Health problems and natural disasters are topics no one wants to consider, but they do arise. 

You should have health, disability, life, homeowner’s (or renter’s), and umbrella insurance by the time you hit your 30s. Discuss your specific requirements for insurance with a reliable advisor. 

Buying insurance today can save you money in the future, especially if you consider the fact that the younger you are, the cheaper your life insurance premiums will be and the healthier you are, the cheaper your health insurance premiums will be.

Not discussing finances with your partner

No one wants to talk about money when they’re dating, and no one wants to talk about money when they’re engaged because it will dampen the mood. If partners don’t confront their financial discrepancies until later in the relationship, it can become a major source of tension.

If you’re already engaged, it’s tempting to suggest that you’ll work it out later, but this is the number one cause of marital conflict and a surefire way to end up in court.

It’s possible that your experiences and perspectives on money are different. Even if your budgeting methods don’t sync up precisely, you should be able to come up with something that works for both of you. 

Once your assets are combined, the conversation gets trickier. You shouldn’t bring it up on a first date, but you should start considering it before you get married.

Overspending on your firstborn

Every parent wants what’s best for their child, but sometimes it results in a cluttered home full of expensive toys, clothes, and accessories. 

We understand that it is challenging to make sound financial decisions amidst the excitement and lack of sleep. But, your sanity will be gone before you know it if you don’t take the time to monitor your spending and your savings.

Consider what you need, how long you will use it, and how much money you have available. No matter how much money you spend, your new baby will be cherished.

Frequently Asked Questions

Some of the ways you can plan for your retirement in your 30s is to make full use of your employer’s retirement plan, including the matching contribution, or start a standard or retirement account and invest regularly.

Invest in a wide variety of securities, such as equities, bonds, mutual funds, and cash, to spread out your risk and maximise your liquidity.

You can use an OTT Voucher to add your investment to a unit trust managed by Momentum, all on the platform EASYInvest. 

Some things you should factor in before making your first home purchase include PMI (if you put less than 20% down), taxes, insurance, and other costs associated with owning a home.

You should have health, disability, life, homeowner’s (or renter’s), and umbrella insurance by the time you hit your 30s. Discuss your specific requirements for insurance with a reliable advisor.

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