Your 30s Is the Time for You to Get Settled, Not to Lose Your Money in Money Traps. Here’s How to Avoid Them.
Hitting your 30s can come with some upgrades to your income. As you move from an entry level position in your career to something bringing in the bacon, it brings with it new financial temptations.
Without a second thought you might start taking an annual overseas holiday, buy a new home and upgrade to a lush car. Before you know it, you might feel overwhelmed with financial pressure and be wondering where your larger salary has gone.
Before this happens to you, let’s tackle this head on, Aluxers, and make sure you don’t fall into these 10 Money Traps to Avoid in Your 30s.
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1
The Unaffordable Partner
Don’t get suckered into funding your partners lifestyle just so you can feel like a “good” or “supportive” partner. In the end, this will sink both of you. While spoiling your partner is totally part of romance, you shouldn’t be spending every waking hour working so that your partner can buy new shoes.
It’s important that at this stage of your life, you and your partner share a financial vision. This is the only way you can advance a future together that doesn’t involve working non-stop and never getting anywhere. More on how important this plan is later.
2
Trying to Match Your Friends Spending at Social Situations
It’s easy to get swept up in a social occasion and before you know it you’ve bought several bottles of the most expensive champagne for the table. While this is a great gesture, it’s not the only way to “win friends and influence people.”
Those days are over. And those people won’t stick around when you bankrupt yourself after a few weekends hanging out with them. Be realistic with your income. Having fun is important. Give yourself a social budget that suits your income and enjoy it and stick to it. You don’t have to “one up” real friends, and if you can’t afford to go out every weekend, then simply don’t, find more affordable fun.
3
Thinking That a Luxury Life Equals Success
When you hit that higher paycheck, there is an immediate pressure to start “living the lifestyle”. But to a discerning Aluxer, we know that outward appearances of luxury don’t always equate to real success. And while we love nice things, securing real wealth comes first in our priority list.
Don’t fall into the trap of creating a temporary luxury lifestyle with money that you can’t keep up the payments on. It will end up costing your long-term financial freedom.
4
Putting Your Kids’ Immediate Needs before Financial Security
Your kids are always going to want or need something. A new bike, ballet lessons, and cool shoes like their friend at school. And there are some things you can afford, and others you can’t. That doesn’t mean the asking will stop. If you have kids, you will have to grow a thick skin to nagging and become more familiar with the word “No” than succumbing to the pressure.
It’s not that all parents don’t want to give their kids all these things, it’s just that it won’t help you as a family unit in the long run if that means you can’t afford to take time off. It could mean you never save an emergency fund for medical care or turn you into a ball of stress when you are around your kids because you’re in so much debt.
Long term financial security will carve out a far happier childhood for your child than a new Xbox will. Knowing their home, schooling and basic needs are not a worry and their parents are happy, is what really matters. All the rest is just ornamental.
5
Spending Too Much on Weddings and Holidays
If you choose to marry in your 30s you might want to really splash out on the wedding, because, let’s face it, you and your friends need a good party. It can feel good to throw a big blow out nuptial event but be sure this one special day doesn’t mean you’re paying it off for the next 5 years.
The same goes for holidays. As you earn more, you might feel that “backpacking” style holidays aren’t for you, and your holiday budgets might cost the same as a car. It’s great to take a break, and spoil yourself, but be sure you don’t get caught up in the hype and then have to work like a dog the rest of the year to pay for it. Meaning the holiday left you more stressed and tired than if you stayed home.
6
Not Investing for Retirement
The joys of compound interest are never clearer than if you get a full thirty years of an RA. In your 30s that might seem like crazy delayed gratification, but when you get to your 50s and you can relax knowing you are covered, you will be glad. The sooner you start the better.
The younger you are the smaller your monthly contribution can be, and the less it hurts over your lifetime. Most importantly is that you will invest far less and get a much bigger return. And the biggest benefit is all the monthly tax you can save in most countries. In the end it’s like saving money for later, while also getting a little extra to spend right now. Win win.
7
Failing to Plan For Emergencies or the Future
At thirty it’s normal to still feel like you’re invincible, a little wiser, but still impervious to disaster. This is probably what makes it a great time to make calculated risks and try new things. But it shouldn’t mean that you don’t plan at all for ALL eventualities. Cars breakdown, unforeseen medical expenses crop up, and kids get picked for a sports tour. Having no wiggle room in your cashflow to pay for these can mean major stress and perhaps taking on expensive debt you can’t afford.
Your thirties are the best time to take responsibility for life’s unexpected nature and build in a monthly savings towards an emergency fund. It’s a good time to look at saving for other future needs. Do you want to have kids, or are your kids going to attend college? Perhaps you want to emigrate later in life or retire young. Whatever it is, best you start getting the funds together.
8
Buying above Your Means
In your thirties there can be a lot of pressure to buy a house and drive a great car. And while these are great to have, these can be money traps.
There can be an unspoken rule in your company that you need to upgrade your car to match your job title or buy a house in a certain price range to keep up with friends. But that’s a ridiculous rule of measure.
How much you earn, and your personal financial responsibilities could be completely different to the guy in the next office. They could be single or not have kids. A car might make you feel slightly important for a minute, but if you can’t really afford the repayment that good feeling will fade fast. The same goes for a house that robs you entirely of your lifestyle because you can barely make the mortgage each month.
If you struggle with saving money, check out 15 Signs You Suck at Money (And What to Do about It).
9
Failing to Upgrade Your Career
After all that pushing in your twenties, it can feel like time for cruising in your career. This is where you will be doing yourself a disservice. All those new twenty somethings will be hot on your tail soon. It’s important to keep a slow and steady upward trajectory in your career. This doesn’t mean you have to always feel under threat, but also don’t feel that your earning is completely secure.
Stay on top of developments in your industry, keep learning and upgrading your soft skills, and remain actively seeking out ways to take on more responsibility at work that puts you in line for promotion.
10
Not Setting Any Financial Goals
Trap number one when it comes to money moves in your thirties is failure to make any. If you’re going to go the distance and build wealth, you need a plan. Setting out a roadmap of a final goal as well as some shorter-term goals, is the first move.
Then seeking advice from a professional on how to get there is critical to get accurate and reliable advice. This isn’t how to bake a cake or a trap, this is your hard-earned money, it’s a bit more of a disaster if it’s a flop.
Question:
What is the biggest money trap you have been victim to? Be honest, we’re all friends here.
