Many people think that once they’ve cleared their 20s, it’s smooth sailing from here on out.
They figure they’ve got enough life experience to make the right decisions.
If you’re close to retirement, I’m sure you’re reminiscing about how you had it all worked out back then, even if it was only in your mind.
But, if you’re heading into your 30s, I’m here to tell you that there are some crucial mistakes still to be made.
I’ve compiled a list of The Big Four for you to watch out for.
- Kids above financial security. If you decide to start a family later on in life, make sure you’ve been holding off for the right reasons. I get that not all families begin with careful planning, but a mistake many people make is having children before securing their financial future.
It may sound selfish to focus on your career or other necessary financial arrangements before starting a family. Still, there will be more hardship down the road if you end up being unable to afford that family. - Buying more house than you can afford. This is a fairly common one for people in their 30s.
And why not? Most people in their 30s are settled enough into a career to say to themselves, “My income’s stable – this is manageable” – or the ever cringey “I deserve this!“
(Obviously, you deserve the best – we all do. But ‘the best’ might not be realistic – and BOOM – you’re house-poor and living paycheck to paycheck.)
Two things to remember:
- Even though you might be able to afford the mortgage payment, make sure you can afford the other expenses! A bigger house = bigger utility bills, repair bills, and insurance costs.
- What happens if your income gets reduced suddenly. Can you still keep up with your bills?
- Buying a bigger car than you can afford. The same principles apply here as the house.
But, the real problem with buying an expensive new car is that typically, cars lose 50% of their retail sales price within the first three years.
If you spent $40,000 on a new vehicle, you’ve lost close to $20,000 of the value! And I’m going to go out on a limb and say that you haven’t even made $20,000 in payments in those three years – so goodbye, money!
The solution is in the problem, though. If the value decreases in 3 years, why not consider buying a car that’s 3-5 years old? - Jacking up your credit cards. It’s tempting to sign up for every reward card your bank and big-box store offer, but resist the urge! ‘Shotgunning’ applications at too many credit lenders will make a huge dent in your credit score.
Add that to carrying large balances and making the bare minimum payments, and you’re looking at an interest-laden credit nightmare. Stick to 1 or 2 cards and keep your balance in check.
I hope you’ll avoid the Big Four of your 30s, but remember – these tips can apply to anyone at any stage of life.
It’s never too late to get your finances under control and plan for the future. Give my office a call at 513-563-PLAN (7526) or click here and set up a free 15-minute session to set yourself up for a lifetime of financial success.
