Climbing the career ladder, perhaps buying a home and starting a family – the 30s are an exciting stage of life. To help you make better financial decisions, our financial planner has shared some of the common mistakes made, to help you avoid them!
5 common financial mistakes people make in their 30s
Climbing the career ladder, perhaps buying a home and starting a family – the 30s are an exciting stage of life. However, the decisions made now can make a big difference to future financial wellbeing, and with so much going on it is understandable, even inevitable, that there will be a few wrong decisions made along the way.
To help you make better financial decisions, our financial planner has shared some of the common mistakes made, to help you avoid them!
1. Accumulating lifestyle debt
Thinking of purchasing an expensive new car? The value of new cars plummets as soon as you drive off the showroom floor and buying it with borrowed money means you’re paying interest on an asset that is diminishing in value.
Likewise, if you don’t pay off your credit card balance each month, the interest will accumulate, and it will become increasingly difficult to clear the debt. Don’t live beyond your means. Think about what you actually need
rather than what you want
2. Not insuring your most important asset
Subject to popular belief, your biggest is not your house. For most 30-somethings your biggest asset is the ability to earn an income. Most health-related absences from work are due to illness or non-work related injuries – things that are not covered by workers compensation. Income protection insurance can replace much of the income lost due to accident or illness. However, it’s a complex product so seek expert advice. Our financial planners can help if you need.
3. Still feeling bullet-proof
Sadly, death and disability can strike at any age. Now is the time to make a will. Investigate powers of attorney and health directives. If the worst happens, these documents will make it easier for your loved ones to settle your affairs.
That would be a pity because the 30s is a decade of huge potential. Good advice now can help you unlock that potential.
To find out more, talk to a one of our financial advisers. They’ll work with you to devise a strategy to help you achieve your financial goals whilst enjoying your current lifestyle.
4. Forgetting to save
A rule of thumb is to save at least 10% of your income, but saving even a small amount is better than doing nothing. And in your 30s you have time on your side.
For instance, when Bridie turned 30 she started to put away $200 per month at an interest rate of 5% per annum (after tax). By the time she’s 60 her savings will grow to $166,452. If she waits until she is 40 to start her savings plan she will accumulate just $82,207 – less than half!
5. Focusing only on the money
On the other hand, it’s possible to be too fixated on the money – working too hard, snapping up investment properties like it’s a competition. This may be a hard habit to break, but working on some current lifestyle goals and finding some balance can deliver a different type of reward.
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