If it didn’t happen in your 20s, then your thirties could include some substantial additions to your financial life – namely a spouse or partner and/or kids. These loved ones enhance your life in so many ways, but they also mean you need to watch for some common financial issues that crop up in your thirties. Going it alone? Single and loving it still means you have some financial things to think about and can still make these common errors people make in their 4th decade.
Keeping Up Appearances
The right house, the right car, the right school for the kids all cost money. If they fit your budget, you’re fine but what if they don’t fit? People in their 30s struggle with credit card and loan debt that is largely attributed to keeping up with the neighbors, according to a recent piece in US News and World Report. This need to have the right status pieces or to show off your prosperity can have a huge impact on your bottom line. Truly living within your means - -and not worrying about what the people next door are spending - - can improve your financial outlook considerably.
Out Of Control Debt
Whether it is left over from your 20s or brand new to this decade, the credit cards and loans you’ve accumulated can cost you big time in this decade. Not only does debt cut down the amount of money you have to spend and save each month, but the amount of debt you have can also impact your ability to buy your dream home or make a large purchase. Not learning about utilization (the amount of available credit you have vs. how much you’ve used) and your debt to income ratio can cost you if you want to buy a larger, more expensive home.
Failing To Plan For Emergencies
With all of the exciting life changes that happen in your 30s, come fresh responsibilities and potential problems. You likely own a home, car and other big ticket items at this point, so having a fully funded emergency fund is a must. Even an extra $1000 on hand is enough to get that car moving if something goes wrong, without breaking your budget; financial guru Dave Ramsey considers this “baby” emergency fund a must for everyone.
Part of protecting your assets and planning for emergencies includes protecting your own health and the financial health of your family. Securing life insurance now ensures that you’ll be insured later, and keeps your rate low. One of the most common financial errors in this decade is to skip disability or life insurance or estate planning if you are single or don’t have kids. Reviewing your situation annually and making sure your assets are truly protected is a must as you move through this turbulent and changing decade.
Failing To Plan For Retirement
Your thirties have the capacity to be the biggest wealth-building decade of your life, thanks to the combination of your rising income (you likely have 10+ years on the job by now) and time. The earlier you invest, the more money you’ll be able to accumulate by the time you retire. At the very least, taking advantage of any employer matched retirement opportunities and setting aside some of your income for retirement now can help you capitalize on the 30+ years your money will have to grow.
If you have kids, then this is also the time to start saving for their college; save for your newborn now and you won’t have to face the dilemma of paying for college and retirement at the same time.
With a solid decade of experience behind you and the income to match, your 30s offer you an incredible wealth building opportunity – if you take advantage of it. Start investing for retirement and avoid these common errors and you’ll be able to retire easily and on time in your 60s.