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Financial Mistakes To Avoid In Your 30s

how to spend money wisely

We all make mistakes when it comes to our finances. Some can have serious consequences. Here are 5 tips to avoid them.

Have you ever felt like you spent too much, told yourself that you “should have done that” when a good opportunity presented itself and then didn’t take it?​

Just last week, I received a phone call from my bank which had urgently blocked my credit card, because someone tried to debit a payment that I had not initiated. I felt pretty stupid after probably not paying enough attention on the internet.

Money-related mistakes happen to all of us. US studies show that 85% of respondents say they have made financial mistakes in the past ten years. Credit card debt was number one, followed by lack or absence of foresight and overspending.

It is in our thirties that our life undergoes the most transformations. The career takes off. Romantic relationships become more stable. 

For some, the desire to start a family becomes a reality. It is a symbolic period when many hope to finally realize their dreams. But it is also the beginning of responsibilities. And the decisions made at 30 will have an impact for several decades. 

Hence the importance of avoiding mistakes that will put you in the way for the next 10 or 20 years.

Here are five of these financial mistakes to avoid to fully enjoy your thirties without harming your future.

5 Financial Mistakes to Avoid in Your 30s

  1. Using credit wrongly

A career that takes off and the arrival of the long-awaited autonomy push some thirty-somethings to want everything now. Miraculously, credit is generously offered to them to fill this need! And what could be more normal than borrowing to “leave” in life?

Unfortunately, believing that having debt is okay is the best way to mortgage your future. The addition of monthly payments leaves little room for savings. These obligations combined with the lack of savings will penalize the realization of your future projects.

Three ways to get yourself in trouble with credit

Overuse of credit also affects your debt ratio, which is the ratio between your gross income and your debts. A good ratio does not exceed 30%.

As soon as it approaches 40%, it becomes critical. If you fill up your credit cards, you won’t have any leeway when needed.

Finally, your debt ratio and your payment habits are recorded in your credit file. And a bad record is detrimental to obtaining new financing. 

Not to mention that it increases the cost of your current expenses such as that of your insurance .

Did you know that your debt ratio and a bad credit report can have an impact on getting a job or a promotion? Indeed, some positions require security clearance. The state of your credit file could affect the obtaining of this accreditation.

Intelligently managing your debts in your thirties will therefore have an impact for several years.

  1. Buy a new or overpriced vehicle

After driving around in their twenties, many motorists buy or lease their first new car in their thirties. But this decision causes two problems when financing their new acquisition.

First, many buyers negotiate a low monthly payment rather than opting for a less expensive vehicle. Indeed, they try to obtain the lowest monthly payment, going so far as to sign an 8-year loan. 

They therefore end up with a car financed over a longer period of time than when they will own it. When changing vehicles, the balance of the loan is added to the next one… and thus begins the vicious circle of financing “balounes”.

Second, the average price of a new vehicle has exceeded $40,000 in 2020. Putting so much money on an asset that loses so much value mortgages the resources available for other purchases.

Especially if your annual income is close to the cost of the vehicle! Are you ready to put a year’s salary on an object that is depreciating so quickly?

  1. Buy a house at all costs

The new lifestyle habits caused by the pandemic have raised unparalleled enthusiasm for buying a home.

The high cost of rental housing and the need for space are stimulating the enthusiasm of first-time buyers. Others see the astronomical profits that current owners are making and want to ride the wave.

Without realizing that it is indeed a seller’s market and not a buyer’s! They are therefore paying too much for a house that could lose value when the markets calm down.

In addition, new owners often neglect to calculate the cost of acquiring and maintaining a residence. And sometimes overestimate the resale value of their home.

Before you commit, do your math and review your options. Because the money “invested” in real estate will influence the realization of your other projects.

  1. Investing without a strategy

In their thirties, the increase in income pushes many to embark on the world of investment with their eyes closed.

Ignoring the advice of experts, they choose fashionable products rather than being strategic. Some therefore choose investments that are too risky or, on the contrary, too conservative.

They then miss the opportunity to take advantage of the magic of compound interest . Or they neglect the impact of inflation on their long-term investments.

If more and more neophytes are interested in stock market speculation, it is also necessary to know how to measure the risk. Building an investment portfolio takes thought and strategy.

Learning to diversify your portfolio will allow you to achieve your goals without risking sacrificing the achievement of your dreams.

  1. Neglecting to talk about money with your partner

The fleeting relationships of your twenties are behind you and you now want to stabilize your love life? This is the perfect time to talk about money with your partner!

Many couples shy away from the subject, mistakenly believing that love and money don’t mix. But neglecting to discuss finances between spouses always ends up causing friction and frustration.

The statistics prove it: conflicts related to money are the main cause of separation and divorce.

Whether you’re  married or courting, address money issues right from the start! In addition to knowing early on whether you are compatible or not, you will protect your financial future.
Of course, this is just an overview of the financial mistakes usually made in your thirties. But avoiding these five mistakes will allow you to enjoy life without mortgaging your future. You will be able to live well and be proud of yourself (and richer) at 40!


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