Common financial mistakes to avoid in your 30s

• The most common financial mistake is forgetting that the earlier you start, the easier it is to reach your goals. It is like laying the foundation for your future.
• By avoiding some financial mistakes, you can save more over time and achieve long term financial goals easily.
• Here are 8 mistakes you can rectify to help you balance your finances.

The 30s are a crucial period of one’s life. At this point in life, most of you must be juggling several things at the same time -- making the last few payments of your student loan, saving for a wedding or even planning to start a family, slogging for a promotion and so on.

In this phase, most of you have started taking additional responsibilities that would require you to be financially stable. For this, you need to be disciplined with your savings and investments for the long term and avoid common money mistakes.

Here are 8 common financial mistakes that one can easily avoid in their 30s:

Getting into credit card debt

Yes, credit cards are convenient and do offer attractive benefits to buy bigger stuff like a car or so. But if you are using it for every single shopping purpose, it means you are making it a habit and getting into a debt trap. If you think this is a hoax, just check the enormous amount of interest rates charged by credit cards especially if you miss an equated monthly installment (EMI). It can feel like a solution at the moment but at the end of the day, it is just making you fall in debt more and more.

Delaying investments

Whether you have started investing or not, you must have come across names like billionaire investor Warren Buffett, Peter Lynch and Indian investors like Rakesh Jhunjhunwala, Radhakishan Damani. Interestingly, Buffett started investing when he was 11 years old. This is not to tell you to do the same. Starting to invest regularly would also do the work.

The sooner you invest in equities, the more time you have to earn returns. And the more time you get, more returns are earned. Suppose you started investing ₹10,000 every month in a mutual fund with an expected return rate of 10%. After 10 years you have ₹20.65 lakh.

Lack of financial goals

Not setting goals is the biggest mistake people can make in their 30s. Setting up goals provides a certain financial direction to your life. It sets up timelines for achieving great things in life such as financial independence, buying a home, having kids and starting a business etc.

Avoiding retirement savings

Saving for retirement may sound too boring and unnecessary at this age. But with the growing age of life expectancy and if you plan to retire at 60, means you have 3 decades to save for your retirement. And imagine what a regular investment in these 3 decades can do to your retirement. Delaying the thought of saving for retirement will negatively impact your ability to accumulate sufficient savings for your golden years after retirement.

Not keeping track of your spending

The biggest mistake of all is not keeping a track of your expenses. Mindless spending can destroy your wealth over time. The key to accumulating more savings is by spending less on unnecessary things and saving it for the future. There are tons of mobile applications for free that help you manage your budget and master your cash flow. Use it and keep a tab on where your money is going.

Ignoring insurance

It is difficult to think about sickness and life threatening incidents at this stage in life, but the truth is you need to be prepared to protect yourself and your loved ones from such situations.

Just buying a term life insurance policy can provide good financial security for your loved ones. In addition to it, you can also start buying health insurance for your family members.

Conservative investment approach

In your 30s you have plenty of time to take risks that you wouldn't in the age of 50. You can allot more of your portfolio to more volatile investments like equities and real estate for that matter, which generally requires 5-10 years to deliver strong returns.

You can also make a balanced portfolio of either 60% equity and 40% fixed income investment. Also, if you do not understand investments as such, you can consult a financial advisor.

Not creating an emergency fund

In your 30s, you have more responsibilities and liabilities than your 20s like household expenses, loans etc. This is why it becomes crucial to avoid the mistake of not having a financial plan in place for unexpected emergencies like COVID-19, job loss, expenses for house repairs etc., by creating an emergency fund for 6 months. This can be your 6 months’ salary you have saved for a rainy day.

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