People in their 30s might assume they have a decent grasp of financial management, investing, budgeting, and savings. Unfortunately, optimizing your income and being in a healthy relationship with your spending takes more than that.
Naturally, given that money matters are not openly discussed even in close families, people are left to learn from the internet or through trial and error. So, this time, we hope you learn from others’ experiences and won’t have to make the same mistake yourself.
Relying solely on your main job
Having a stable job is the most significant responsibility for every adult. However, regardless of the industry or position you take, you shouldn’t stop there. Successful people know that having multiple income streams is incredibly helpful. Of course, the second or third stream might not match the earnings of your primary job, but it’s definitely an influx of additional cash.
One example is to take advantage of your specialized skills through freelancing. Consider joining global platforms like Upwork or seeking more local platforms to partner with people in your region. In addition, you can pick up microtasking, a less demanding opportunity. For instance, JumpTask provides many jobs that resemble simple online activities, such as watching videos, playing online mobile games, or experimenting with AI. So, you’ll get paid for providing freelance services, and in your spare time, you can pick up a few microtasks and get paid for them.
Living outside your means
People entering or settling into their 30s often feel pressure from their families or society at large. For example, generations before them already owned property, multiple cars, had children, and were even experimenting with investments. However, with high home or apartment prices, people are living as renters for longer and continuously saving for the opportunity to own a home.
Generally, these pressures of being in a different life stage can lead to the following mistakes:
- Buying homes or apartments by taking loans they cannot afford. For example, a bank might provide a loan, but if you end up paying several thousand dollars per month, it can put you in a risky situation (in case you lose your job or other sources of income).
- Overspending on luxury items such as clothes or electronics.
- Living paycheck to paycheck: unable to set aside anything each month.
- Being incredibly active on social media with photos from trips or other expensive activities. Such boasting is an attempt to showcase their life in a more positive light, regardless of their financial situation.
- Not saving for retirement and spending all your income on your lifestyle, as opposed to saving and investing.
Not having a financial plan and budget
A budget and even a simple financial plan are crucial components of an adult’s life. Let’s start with financial planning:
- A financial plan begins with the evaluation of your current situation: living arrangements, income, future income, savings, and spending trends/patterns. In other words, perform a financial checkup for your well-being and prospects.
- Then you start thinking about where you want to be financially in two years. Given your income and spending, the timeframe for reaching your goals (such as buying a home) highly differs.
A budget is the action variable that actually helps you reach the goals you mention in the financial plan:
- A budget should help you track your spending and set fixed expenses.
- You should set clear limits for how much you want to spend per month on various purchases.
- People with financial goals allocate about 60% of their income to fixed and necessary expenses. Then, 20% go to their goal: saving for a house or a car. Finally, the next 20% lands for their emergency fund.
Not caring about an emergency fund
Another obstacle to a more secure, comfortable life is not building an emergency fund. These savings are not for fun trips or new furniture; they are for unforeseen situations, such as illness or losing your job. As mentioned in the previous section, 20% of your income should be dedicated to this fund each month. Generally, most people aim to have at least 6-12 months of living expenses saved to cover themselves. The more you manage to save, the less untouchable you become in case of medical expenses or forced relocation.
Of course, having 3 months of expenses covered is also good, but you should also have a job that is relatively easy to replace if you lose it. The 12-month mark is helpful for people who struggle to land positions in their fields due to high competition or limited job availability.
Not having financial discussions with your partner
People in their 30s are likely to have heard (or are hearing) the bells ring. One of the crucial discussions for every couple is their finances. Ensure that both partners engage with their financial planning and are aware of what saving or budgeting is required to achieve their shared goals.
Not investing or investing too risky: no middle ground
Safe investments might not bring such significant earnings, but they are beginner-friendly for a reason. After all, new investors don’t want to lose their capital or invest in companies or opportunities that aren’t stable. Overall, it’s much better to start slow and invest using the various assistance (such as automatic investments).
Conclusion
It’s okay not to have your future and finances under control by your 30s. The pressure of moving forward faster than you realistically can is one of the biggest mistakes. After all, that leads to overspending on things you cannot afford or entering financial contracts that could be incredibly dangerous if you lose your job or become ill.
