The 30s, an age where life-changing events take place, is the age wherein the majority of the people are loaded with responsibilities.
You might get married, buy a new home, have a child, advance in your career, or have to look after your parents heading towards their old age.
This is the phase that is marked by several important financial decisions you might be required to take.
Thus, sound financial planning with caution of avoiding some common mistakes turns out to be your best financial friend.
Here are 5 common mistakes which most people make while financial planning in their 30s. If avoided, this can help you in bringing your financial health on track.
1. Living beyond means
Since you are in your 30s, you must be aware of the importance of having a budget and sticking to it religiously. When in your 30s, you need to make it a practice to evaluate your spending every few months. Try to analyze if you are spending too much on things that are not necessary and are underfunding your emergency or retirement plan.
Living beyond your means make ensure you are living a life you dreamed of in your 20s but can have an adverse impact on your future finances ultimately making you sacrifice more in the later years of your life.
2. Having too much high-interest debt
Credit cards are a savior when purchasing online. They help you in building a strong credit score. However, if you are once trapped in the habit of spending using your credit card, it is extremely difficult for you to get out. This can daunt your financial planning and health in the long run.
The interest rates that are charged on these plastic cards can be astronomically high. The right approach is to find out what interest you are paying and start by paying off the highest debt or interest rate first. The last thing you should do in your 30s is indulging in unnecessary debts which you will be required to pay off later.
3. Postponing your retirement planning
When you are too engrossed in your work, your retirement might seem an eternity away. This is nothing but a mirage that’s fooling you. The key to having a financially secure life after retirement is making retirement planning an essential part of your financial planning process.
Start as early as you can by putting away money for your retirement. Even if it’s a small amount you start with, make it a practice so are to harness the benefits of compounding interest over the long term. Seek assistance from your financial advisor by sharing your financial goals and objective with him and designing a strong financial plan.
4. Not setting up an emergency fund
As your family and your commitments grow, you need to be prepared both emotionally and financially for unprecedented and unexpected emergencies in life. The best way to start with is investing a small amount of your income in financial products giving you a higher rate of return.
Your emergency fund should be a crucial part of your financial planning and should reflect your increased responsibilities. Your financial planning should be such that it helps you avoid getting into a debt trap.
5. Waiting too long to start investing
Having financial freedom after retirement is something that cannot be achieved overnight. You need to plan your finances early to have a relaxed old age. Hence, instead of waiting for too long, you should start investing in different financial instruments early in life.
In your 30s you are still on the path of building your career. Hence, it is the right time you can take risks, start saving, start investing, and start your financial planning journey to have a debt-free and stress-free life in years to come.
