In your twenties, chances are you made a lot of money mistakes — from carrying a lot of credit card debts to eating out all of the time to having no savings. It’s understandable, after all, as you are trying to adjust to a lot of new things and you had fewer responsibilities. Now that you’re in your 30s, things are a little different. Your 30s is a period in which you might be thinking about early retirement, about having a family, or about getting married, etc. It is a period to get serious so you can be financially secure later in life.
However, many of us in our 30s make the same money mistakes we did when we were in our twenties. If you want to achieve financial independence, avoid making these 7 money mistakes.
If you need more specific guidance with your finances, consider speaking with a financial adviser.
1. Not Having a life insurance.
If you are married with kids, it’s important to have a life insurance. If you die unexpectedly, you need to make sure that some expenses like funeral costs, home mortgage payments are covered. So, make sure you have adequate life insurance to cover these expenses.
Click here to buy life insurance with Ladder.
2. Not Saving money for retirement.
Without a doubt, one of the many money mistakes to avoid in your 30s is putting off planning for retirement. The reason is simple: You need to make sure you’re financially secured in the years that you’re not able to work because of old age.
So if you currently have a retirement account (whether it is a 401k plan, a traditional IRA or a Roth IRA), then good. If not, start one right away. You should take advantage of these plans, because the money you invest grows free of taxes until you take it out. That also means the interests and dividends accumulate on a tax-deferred basis.
3. Not saving money for emergencies.
Saving money for retirement is good. But not every dollar needs to go in those retirement accounts. There are times when an emergency arises and you will need money to solve these problems. You would do yourself a disfavor if anytime some unexpected thing happens, like your car needs a major repair, you’re withdrawing money from those accounts.
That’s why it’s important to have a separate savings account for these emergencies.
Related: Money Saving Tips: 6 Secrets to Saving Money.
4. Not shopping for a mortgage loan if you’re buying a house.
If you’re thinking of buying a house, you should avoid sticking with one mortgage lender. Instead, you should shop and compare several mortgage rates with multiple lenders. Buying a house with a mortgage loan is perhaps the biggest expense you’ll ever make. So getting the best mortgage rates can save you thousands of dollars in interests over the life of the loan. And that is possible when you’re able to compare several mortgage rates and pick the best one.
Related: 5 Signs You’re Not Ready to Buy a House.
5. Failing to raise your credit score.
If you didn’t take your credit score seriously in your twenties, now it’s the time to do so. This is crucial, because your score determines whether you are financially responsible. It determines whether you will be qualified to take thousands of dollars in loans when you’re ready to make your biggest purchases, such as buying a car or buying a house.
The first step in raising your credit score is to get a free copy of your credit report. Once you get the report, go through it and check for any inaccuracies. If there are some, dispute them immediately by calling the three credit bureaus (Transunion, Experian, and Equifax). The second step is to make sure you start paying down any credit card debs you may have. Doing so will significantly increase your credit score. For more tips on raising your credit score, please read: How to Raise Your Credit Score to 850.
6. Failing to Invest.
One of the biggest money mistakes people make in their 30s is not investing their money in stocks. Stocks have historically been one of the main avenues to become wealthy. In fact, most of the world’s billionaires, if not all, have achieved their wealth through owning stocks – Whether through shares of their own companies/businesses or share their own in other companies. So, if you’re not investing in stocks in your 30s, you are leaving money on the table.
Granted, investing in stocks is risky business. But, as the saying goes, the greater the risk, the better the rewards. Even if you’re not a savvy investor, you still can own stock through a mutual fund. Or through an investing app, like Acorns, which rounds up your spending to the nearest dollar every time you make a credit card purchase and invest the difference in index fund and ETFs.
7. You have no financial plan.
If you have no financial goals in your 30s, then it will be hard to know what to do with your money. So you need to set some clear financial goals in other to get ahead. Some financial goals include paying off debt, building savings, saving money for a down payment, buying a car, or going on a vacation.
So if you have problems with money right now, you need to set up an effective financial plan for things like planning for retirement, buying a house, or getting out of debt.
Work With The Right Financial Advisor.
You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.