In our 30s many of us finally have real world experience under our belts — we’ve tried some things, failed at some and succeeded at others.
When we are asked for ID in bars it’s a pleasant surprise, we spend more money on fewer drinks (cocktail anyone?), we upgrade from hostels to hotels and not all of our furniture is from IKEA.
Some of us have financial dependents for the first time and this responsibility can be daunting.
The savvy among us started working on our financial habits in our 20s [see The 6 biggest financial mistakes people make in their 20s] and here are the mistakes to look out for in your 30s.
1. Spending too much
Keeping up with the Jones occurs across all age groups but it seems more common in our 30s. We want our friends’ South American adventure, our neighbour’s shiny new European car, that massive 4K ultra HD TV.
As we earn more in our 30s our expenses can blow out. To take control, get a clear, detailed picture of your spending. You’ll be amazed how much you spend on things you don’t need and how changing your habits even a little can make a big difference over time.
2. No financial plan
Many of us have money insecurities, the belief that somehow we’re not doing it right and that everyone else is doing it better. If so, grow up and get over it.
Unless you’re a Mark Zuckerberg or an Amy Schumer (both in their 30s), the proven way your successful peers build their personal wealth is having a sound financial plan.
If you hadn’t already set a budget and a plan in your 20s, your 30s is a great time to create both. Not everyone needs a financial planner but everyone needs a financial plan.
3. Marrying without discussing the “F” word
Discussing your finances with another person can be uncomfortable, up there with pulling teeth and fingernails scratched down a blackboard.
You must place financial honesty and openness at the heart of your most important life relationship. Discuss money openly with no blame or shame, what is done in the past is done.
Move forward together with a financial plan. If you don’t, stresses and tensions over money are a leading cause of separation and divorce.
4. Renting or buying
Accept that there is no simple answer to the question of whether you should rent or buy. What is correct for you depends on your circumstances — your attitude to risk, debt, interest rates, the rental and property markets.
Some will buy to hang pictures on their own walls; some will rent to live in their dream suburb. Neither are financial reasons and often our attitude to a home is based on emotional, not financial issues.
The biggest mistake people make when buying or renting is paying too much. Set a firm budget before you commit and stick to it.
5. Ignoring your super
Do you file your superannuation statements without understanding what they mean? Plan to do something about it one day but there’s never enough time?
Seemingly small super decisions you make (or don’t make) in your 30s are going to have a large impact on your retirement lifestyle. It could be the difference between a frugal and your dream retirement.
Open, read and understand your super statements. Consider additional super contributions, consolidating your super, your investment decisions, your asset allocation, and your super fees. If it’s too confusing, ask your super fund to explain it – you pay fees so demand service.
6. Not protecting your family
If you have dependants, step up and take responsibility in case something happens to you. Take care of your family who may be at their lowest emotionally and financially.
We hate to think of death or being incapacitated but we all know of people who have died, have had medical traumas or have been injured young.
Protect your loved ones. Save up an emergency fund that covers 3 to 6 months of your living expenses.
To protect your assets and income in your 30s, consider health, life and total and permanent disability, trauma and income protection insurances. Put in a place a will and other key estate planning documents.
Your 30s is a great time to take control of your financial future. If you dedicate time and create a sound financial plan believe it or not your finances will start to become fun and easy. The money you save and invest will help you create your dream lifestyle – free of money worries and stresses.
Claire Mackay is a multi-award winning financial planner at the family-run Quantum Financial in Sydney.
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