8 Financial Mistakes to Avoid in Your 30’s — Money Saved Is Money Earned

9 min readFeb 5, 2021

You might be familiar with the popular adage “life begins at thirty.” While life certainly doesn’t begin at 30, we are indeed expected to be more in control of our lives and “grown-up” once we hit our 30’s. At this stage, we are also typically more established in our careers and are thus more financially prepared to enjoy what life offers.

While the societal expectation may be that we should be full-on adults by the time we hit our 30’s, the reality is that turning 30 won’t mean we magically have everything figured out, especially when it comes to finances. Our 30’s doesn’t make us immune from making poor financial decisions that can severely impact and setback our lives. No age truly does. However, there are ways to prevent these financial problems from happeningーstarting with awareness so that we may steer clear of them.

Here are 8 financial mistakes to avoid in your 30's.

8 Financial Mistakes to Avoid in Your 30's

1. Maxing Out Your Credit Cards

Most of us find ways to justify applying for multiple cards in our 20’s, such as proving our financial responsibility, building our credit history, and improving our (then) non-existent credit score. I’d also bet a good many of those who use credit cards in their 20’s maxed them out at least once, made minimum payments, and potentially got themselves into credit card debt.

It’s easy to do, especially if you don’t have basic financial literacy. A lack of financial literacy, combined with the desire to keep up with those around you and a more limited income, creates a recipe for credit card disaster.

You may have fallen into the credit card debt trap in your younger years, but now that you’re entering your 30’s it’s time to start looking at credit cards differently. Once you’ve gotten your debt under control, learn ways that you can make credit cards work for you. Make a plan for what to spend money on and limit your credit card use to only what you can afford to pay monthly to prevent further debt accumulation.

Maybe credit cards aren’t for you, and that’s okay.

2. Getting into Long-Term Loans without a Plan

Another of the financial mistakes to avoid is getting into long-term loans without a plan. I understand that our 30’s is the perfect time to finally invest in a house or a car, especially as we start settling down. The question is, are you really prepared for that commitment?

A good rule of thumb to follow is the 28/36 rule. This means that your mortgage should only be 28% of your monthly income, and your total debt repayment should only be 36% of your monthly income, including your mortgage.

Feel free to apply the same strategy with car payments and try to do so on a much smaller scale, especially if you already have a mortgage. You should definitely consider buying a used car if it means being able to save exponentially on interest and monthly premiums.

3. Living Beyond Your Means

I get it. Life is too short to hold back on the things that make you happy. However, it is not so short that you should sacrifice your financial stability for the sake of YOLO. If we’re honest, you probably already did some of that in your 20’s and are now trying to catch up.

That concert ticket may only cost a couple of hundred dollars. So is that night out with friends. However, if you calculate all of these leisure costs, they can actually accumulate to as much as a thousand dollars per month and even more so in a year. Just imagine if you had invested this money wisely instead.

Now let me be clear, I’m definitely not saying you should sacrifice all fun. However, it’s important to build a budget and make sure you are allocating money to your necessary expenses, debt repayment, and saving/investing before spending money on leisure and fun. With so many different budgeting methods out there, there is a method or mode that will work for everyone.

Living below your means is a critical life skill that will help you get ahead no matter what stage you’re in.

4. Running With Expensive Friends/Relationships

Building off of the previous mistake, we all have that one group of friends who love to party, go shopping, or get easily caught up with get-rich-quick schemes. Whatever the method, they all have one thing in common: they like to spend money.

While you may possess personality traits that make you more frugal by nature, it is easy to get tempted to go beyond your budget if you’re running with this type of crowd, or worse, get drawn into the game and actually try to compete.

There are two ways to get out of this predicament. First, you can encourage your friends to take the road of financial responsibility. Suggest ways to have fun without spending a lot of money. Discourage them from shopping on impulse, especially when it comes to big-ticket items. Suggest ways to save money on travel, eating out, and suggest activities that cost little or no money.

If the first method doesn’t work, then it’s a good sign to widen your network and look for a more frugal company to hang out with. The point of hanging out is to spend time together and have fun, not to spend money. If you have friends or partners who insist they have to spend money to have fun, then you’ll likely need to look elsewhere if you want to stay on the road to reaching your money goals.

5. Not Knowing Your Numbers

Another of the critical financial mistakes to avoid in your 30’s is not knowing your personal finance numbers.

Do you know your credit score or if your net worth is positive or negative? Do you know the interest rates you’re paying on that car loan? Do you know how much you have saved for retirement?

If the answer to the above questions is no, then you’re flying blind when it comes to your finances. While it may be tempting to stick your head in the sand, especially if you know some of those numbers may not be great, the sooner you get on track with your finances, the better. Plus, the only way you’ll know where you need to go and what you need to get there is if you know where you currently are.

Take some time to find out where you stand financially, decide where you want to go, and create a plan for getting yourself there.

6. Failing to Prepare for Emergencies

If you’re reading this article, chances are you’re already more financially responsible than most, or at least desire to be, which also makes you less likely to commit the mistakes that we’ve shared with you above. However, here’s a mistake that gets even the best of us: failing to prepare for the inevitable by setting up an emergency fund.

An emergency fund is a savings account dedicated to actual emergencies such as job loss, hospitalization, car troubles, etc. Having an emergency fund will help buffer you and prevent you from easily falling into debt should these things.

And believe me, there will be an unexpected expense at some point in your life. In fact, it’ll likely happen fairly regularly.

Here’s a question that we frequently get from our readers: Which financial goal should you prioritize? Should you settle your debts first or focus on building an emergency fund instead?

It’s ideal to dedicate efforts toward both goals. Still, if you really must choose, we recommend setting up your emergency fund first since it will help you prevent debt accumulation in the event of an unbudgeted expense.

7. Failing to Prepare for the Future

Another common financial mistake to avoid is failing to prepare for your financial future. There are three sub-points that we consider particularly easy to overlook:

Your Retirement. You might not be worried about your retirement for now since you’re at the peak of your career, but early in life is the best time to begin saving for it, especially if you have plans for early retirement. In fact, time in the market will always trump larger contributions later on due to compound interest. Invest as early and as often as you can.
Your Kid’s College Fund. It can be quite easy to get carried away with baby expenses, thinking that your little one needs everything from fancy baby furniture to a monthly celebration during their first year. While raising a child is expensive, and you don’t want to skimp on everything, the truth is that saving money for their future expenses is equally important. Remember compound interest? The sooner you start saving, the more you’ll have.
The Pre-Wedding Money Talk. Another instance where one can get easily carried away is falling in love. Some of us even find it awkward or taboo to talk about money with our potential partner. However, avoiding the pre-wedding money talk can actually lead to an unnecessary strain in the relationship later on. It’s smarter to objectively assess the state of your finances before tying the knot. Learn about each other’s debt and spending habits. Set financial goals together. You can even go as far as dividing the financial responsibility that you expect from each other.

Here’s another frequently asked question: Which financial goal should be met first, your retirement fund or your kid’s college fund? The answer is your retirement fund. Becoming financially unstable after your retirement can burden your kids more than paying student debt.

8. Failing to Prepare for the Unknown

Finally, the biggest of the financial mistakes to avoid in your 30’s is failing to prepare for the unknown. If you continue to gain skills and experience, you’ll likely earn more in your 40’s and 50’s and be able to afford more luxuries and cover all your monthly liabilities. At least, that’s the plan.

But life doesn’t always go that way. It’s wiser to prepare for a financial future without the assumption that you’ll automatically make more money and work forever as a way to compensate for choices made today. You may not even be able to work as long as you think you will, or some other unforeseen event might derail your ambitions.

One way to begin preparing for anything life throws your way is to begin working toward financial independence (FI). Financial independence is when you reach a point where you can cover all your expenses without needing to work. You reach FI by paying off debt, not accruing new debt, and investing.

Paying off debt is fairly straightforward, but investing can seem more complex. The trick to investing is to learn how to balance risk and return. It’s also essential to diversify investments through different investment opportunities and financial products. In this way, if one of them fails, you won’t suffer as much of a loss compared to if you have invested all your money into it. A super simple way to diversify your investments without much work is through index funds, where you buy shares in a fund made up of a range of companies.

Another reason to begin saving, investing, and being more conservative in your spending in your 30’s is that you cannot predict the future. While you may work and make more money for 30+ years, you also may not. There are so many unforeseen possibilities, and it’s important to hope for the best while also preparing for the worst.

Never assume you’ll be able to work forever.

Final Thoughts

Your 30’s is considered one of the best decades of one’s life. You typically have more financial liberties to enjoy things along with the youth to enjoy them fully. However, that is certainly not a reason to put your later decades at risk.

While it’s perfectly fine to enjoy your 30’s, it’s equally important to know what financial mistakes to avoid so that you don’t spend the rest of your life playing catch up.

If you haven’t already, sit down, figure out where you stand and what your goals are, then make a plan to achieve them.

Jim Hughes

Originally published at https://moneysavedmoneyearned.com.