Money mistakes to avoid in your 30s
You are young and healthy. You don’t care about the future. You like revelry and parties. You want to spend today rather than save for tomorrow.
After all, who knows what the future has in store for us? Everything is fine until one day you realize that retirement is not far away and you need to start saving for it.
Money mistakes to avoid in your 30s
1. Saving, not investing
Many people put money into savings accounts thinking that the 4 percent return will be enough to meet all future needs, and this could be one of your costliest mistakes, as such a low yield would not be able to beat inflation.
After you are convinced about investing, the next step is to choose the right product or asset class.
During this stage, most people are confused between stocks and real estate. History proves that stocks have outperformed real estate for a long time.
2. Not investing enough
If you’re making any of the above-listed mistakes, you’re almost certainly not investing enough money or even not investing at all. That is one mistake that must be changed.
The time value of money is very precious, and you need to get it working in your favor.
For example, suppose you start investing Rs 10,000 per month at age 30 at an average annual rate of return of 12%; you’ll have over Rs 3.52 crore* by the time you turn 60!
But if you wait till you turn 40, you’ll have just over Rs 99 lakh* at age 60.
When it comes to investing, you want to start as early as possible.
Additional read: US ETFs for child higher education
3. Not creating an emergency fund
Sooner or later, you will be 30 years old, and your obligations, like household expenses, loan EMIs, children’s school, fees, etc., are much more than when you were 20 years old.
Therefore, it is vital to avoid the financial mistake of not having a financial plan in place for unanticipated emergencies such as job loss, unexpected home repair expenses, etc., by creating an emergency fund.
Having an emergency corpus in place will make sure that you don’t have to borrow too much or have your savings drop to zero to cover unexpected expenses.
To be on the safer side, the emergency corpus should be large enough to cover expenses for 9 to 12 months.
This may seem like a considerable large amount to put down. So you can start with a smaller amount, such as 3 to 6 months of expenses, and gradually add it.
This will ensure that the size of your emergency fund keeps up with your income and expenses so that your finances are not overstretched.
4. Not buying insurance
Increased responsibilities mean you have to plan for different scenarios to protect your family’s financial interests.
While an emergency corpus can take care of key emergency expenses, you also need to avoid making the financial mistake of not purchasing life and health insurance as part of your overall financial strategy.
Insurance is essential to ensure your family’s financial well-being in the event of a medical emergency or your untimely death.
Purchasing term life insurance can provide financial security for your loved ones at a low cost in the event of your untimely death.
In addition, purchasing health insurance can help protect your and your family’s financial interests by covering medical bills if a family member becomes sick/ill and requires hospitalization.
5. Not having clear financial goals
Sooner or later, you will be 30 years old, and you should already have some savings and, ideally, you should already be investing to reach your various financial goals.
If you haven’t set specific short, medium, or long-term financial goals yet, you still have some time left to get back on track if you start immediately.
If you don’t start investing based on goals, you will be like a ship without a rudder, and you cannot plan how to achieve the desired goal.
This is the biggest money mistake to avoid in your 30s. Setting specific financial goals such as buying a car, planning early for your child’s higher education, saving money for a down payment on a house, planning to save for retirement, etc., will help you plan the best course to reach your goal.
When securing your future financially, the most typical financial mistake we make is not starting early for our future goals.
By saving and investing early, it becomes easier to achieve your goals. During your 30s, you are laying the foundation for your future financial plans.
Avoiding these money mistakes in your 30s could help you to achieve your financial goals quickly.