#51. Top 5 Money Mistakes To Avoid In Your 30s
According to a recent survey, over 60% of Americans do not have enough savings to cover a $1,000 emergency expense. However, this does not have to be you.
The great thing about your twenties is that most mistakes you make are fixable. If you drink too much, start being more mindful of your alcohol intake. If you start gaining too much weight, begin focusing on your calorie intake and create an exercise routine. If you do not invest a single penny, read a book on investing to give you the confidence to start.
However, the older you get, the harder it becomes to fix your mistakes. I do not believe there ever comes a time when it is too late to fix a past mistake, but the longer you wait the more difficult it will become
You can avoid this pitfall by doing two things. First, fix any mistakes you may be making. And second, learn what mistakes you should avoid and then avoid them.
I want to help everyone with part two. Through my experiences, research, and talking with others in the personal finance community, I have picked out the five biggest money mistakes that someone in their 30s should avoid.
First. Waiting to invest
I do not want to hide the lead on this one. The worse thing financially you can do in your 30s is to continue to wait to invest that first dollar. The longer you wait, the less time compound interest has to work its magic.
Compound interest is like a snowball rolling down a hill. Just as the snowball gets bigger as it picks up more snow, compound interest makes your savings grow faster as you earn interest on both your initial investment and any interest that accumulates over time. The longer your money stays invested, the more it can grow.
If you create that snowball when you are already halfway down the hill, then it has less time to grow.
Invest that first dollar early, continue making monthly investments, and watch that snowball grow to an unimaginable size.
Second. Chasing the next get-rich-quick scheme
This can be very difficult to avoid in your 30s. Your 30s are a unique time when your responsibilities start to increase and the amount of free time you once had starts to decrease.
It is very easy to start having that "grass is greener on the other side" mindset. Things you would have never considered before, such as MLM or cryptocurrencies, start looking more enticing. If there is anyone or anything that can promise you a financial shortcut to wealth, you start to pay attention.
This is one of the quickest ways to put a wrench in your wealth-building process. When this problem becomes an issue is when people start putting the money they should be investing in safer investments into these other ventures.
I am not saying you cannot speculate with 5% of your portfolio. But I am saying that you should not speculate on these other ventures if you have not maxed out your safe investments for the month.
Third. Listening to the wrong people
Who are the right people though? This is the problem. In today's social media world, the loudest people usually have the most influence and followers. So, if you go to the person with the biggest audience base, it does not mean that person is the one you should get your financial advice from.
Finding the right people to listen to can be challenging. I suggest starting from the top if you are looking for financial advice. Thus, start with Warren Buffett.
If Warren Buffett says that the average investor should invest in low-cost index funds, look for free resources out there that agree with Mr. Buffett and can give you more information about index funds.
I wrote about how to start investing in the stock market in a previous post as well.
In other words, learn from people who have done it before and who are not arrogant about it.
Fourth. Having an invincible mindset
The only thing certain in life is knowing the unexpected will happen at some point. The invincible mindset is strongest in the teenage years, but it is definitely still present in your 30s.
Health is usually the furthest thing from your mind in your 20s and 30s. If work doesn't provide health insurance, oh well. You will just pay for your doctor visits as needed.
Invincibility is not a sound investment strategy. A sound investment strategy realizes that unexpected emergencies can happen, and it will leave you equipped to handle those unexpected situations.
Fifth. Accumulating too much debt
Your 30s or close to it is usually when you are faced with societal pressures to make certain financial decisions.
Two of the biggest purchases a person makes in their life are their first home and/or their first brand-new car. And these purchases are usually made when a person is around 30 years old.
I am not of the mindset that all debt is bad debt. Debt is not created equal. But, you should be mindful of what debt you take on and be careful not to take on too much at one time.
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