Today is the youngest you’ll ever be. Ever heard these wise words before? There’s a whole lot of truth to it. And that’s why while you have time on your side, it’s good to make a lot of decisions early on and be secure in different ways.
Money management is one of them as this can build a foundation to a well planned life and help in achieving your financial goals in an organized manner.
Also, it’s good to make mistakes as there’s always a valuable lesson that one learns from it but when it comes to money, there’s a price to be paid for mistakes made. If you’re in your 30s, there’s a certain amount of security and savings that you’ve probably been building since the last few years.
However, it’s important to be very careful and ensure that you avoid these five basic money mistakes.
While there’s a possibility that you’re already in check with your spending, it’s not very difficult to waver away from it and start spending excessively. It could be to impress your friends, repeatedly buy things you absolutely don’t need, spend on expensive meals more than usual or even engage in expensive leisure activities too frequently.
Every penny spent frivolously is what could have been saved in a mutual fund or towards the repayment of a loan (if there’s one) and can help to endure any form of financial hardship that one might face in the future. Avoiding this mistake can save you in a big way.
Paying off Debt with Savings
It’s best to keep these two completely separate. Ideally, don’t touch any of your savings to repay a debt. Just as you dedicate a certain amount towards your savings every month from your income, similarly do so for your debt repayment.
Understand the implications of repaying your debt with your savings. Using the latter for any other purpose than what it’s meant for, would mean that you are reducing the reserve and in case you ever do so, it’s important to still live like you need to repay the debt – the one towards your savings (as you disturbed that).
Not Discussing Finances Before Marriage
As with everything else, financial planning also becomes a joint responsibility for a married couple. It’s important to have an open discussion about this before getting married to avoid surprising each other with unfamiliar tastes and habits that might increase costs unexpectedly and disturb the budget.
Lack of having this discussion could easily result in clashes related to spending choices and investment plans. Hence, it’s always advisable to have a clear understanding of this before taking the plunge.
Assuming to Get Richer
By your 30s, you are certainly more secure and established on the professional front than you were in your 20s. With about a decade full of experience, it’s easy to navigate in your professional sphere and you have a better hold of things on that front.
However, it may not be necessarily right to take things for granted about your growth trajectory and spend your future money or take loans against the assumption of the money that you may earn in the future. That would prove to be a risky approach.
Not Saving for Recreation
Going out for meals sometimes, perhaps a movie or a concert, a vacation every year and special outings to celebrate occasions is a part of life. Or rather the fun part of it.
Keeping a certain amount aside for all of this is a wise decision as long as you still leave your savings untouched. Fortunately, the fun part of life is recurring in nature and hence, needs to be managed in that manner. Digging into your savings to have fun should be avoided to keep the reserve undisturbed and give you the desired results that you intended it to produce.
Being cautious especially when it comes to money is important for everyone. But the world of finance can seem complicated and confusing with the overload of information available at your fingertips.
Easy access to financial planning advisors can help you plan or alter your plans to suit you better and avoid making mistakes of any kind. Getting a good understanding of investment options, gauging your risk appetite, understanding the implications of adding a debt to your list of payments and developing a sound financial plan are all prudent ways to ensure a secure life. While still in your 30s, take control by putting time on your side and letting that money grow.