Although you’ve survived the tumultuous life of a twenty-something, and your life has likely become more stable, as a 30-year-old, you can face a peculiar set of financial problems.
Statistically, people often have children and buy their first homes during this time period, so your thirties and beyond can be just as expense-ridden as the decade before. Additionally, the importance of retirement preparation drastically increases as you age, and you have less room to recover from slip-ups.
There is some good news, however: although everyone’s financial situation is unique, the roadblocks many encounter during this decade are common and avoidable.
Without further ado, here are some of the potential financial snafus you can face in your thirties, and how you can avoid them.
1. Equating Success With Luxury
Plenty of us see income advances in our 30s, yet very few of us tie this with increased financial health.
The culprit is known as “Golden Handcuffs,” which refers to our tendency to see increased lifestyle bloat as our incomes go up. Keeping up with the Joneses and indulging in ever-more-expensive luxury purchases might feel good in the short run, but it’s no way to build long-lasting financial happiness.
Although you don’t have to move back into your first apartment, you should keep your spending in proportion. The best way to do this is through the 20-30-50 plan: spend 20% of your take-home pay on investing and financial betterment, 30% on fun and luxury, and 50% on essentials. That way you’ll have a better lifestyle while avoiding the hedonistic treadmill.
2. Shelving Retirement Investing For Later
When money is tight in your 30s, you might be tempted to procrastinate with your retirement investing. It deceptively appears to be the smart move to wait until your kids graduate or you finally land that big promotion. However, this can have drastic consequences, because you’ll miss all the time for your wealth to compound and grow.
Instead of playing retirement catch-up, invest as much as you can now — even if it’s a small amount.
3. Overpaying For Your Wedding
The big day is indeed important, but don’t make the mistake of forgoing your long-term financial health for it. Plenty of thirty-somethings get so swept up in wedding fever that they cause long-lasting debt or throw their financial goals out the window.
The average cost of a wedding is $26,720 — which could put a serious dent in your financial future. If you can afford to do so, it’s fine to embellish on your wedding day, but I’ll remind my clients that it’s just that: one day. You (hopefully) didn’t marry your spouse for one celebration.
4. Not Talking About Money With Your Spouse/Significant Other
Talking about money with your spouse (or soon-to-be spouse/partner) isn’t something anyone looks forward to. We’ve been taught that talking money is taboo, and it reveals a lot more than just numbers. Talking about money is a whole new level of intimacy, and it ties into our life goals and dreams.