Money Mistakes 30-Something-Year-Olds Make

Hands holding piggy bank and jar of pennies


As I venture into my early 30s, I think I’ve become pretty careful
about our finances. I certainly know not to continue on with the
mistakes I made in my 20s like buying more car than I can afford or not paying myself first. But something happened last week that made me go, “Uh-oh.”
Now that spring is here, I went shopping to look for new clothes for
my daughter. After a while, my husband looked at all the stuff and asked
me, “Don’t you think you’re going a little overboard here? Why so much
I started to justify why we needed each item. And after a bit, I
realized I was actually repeating myself: “Well, this looks pretty. And
this is very pretty.” I could see the look on my husband’s face. I just
stopped. I had to admit that she only needed half of what I was going to
purchase. She is a baby after all; she doesn’t care about being pretty,
only about being comfortable. Uh-oh, I am making new money mistakes!
When we reach our 30s, many of us have our careers on a steady path;
most of us are married or are getting married; some of us have started
traveling more, purchased a house and might even have a baby or two. But
it’s not a time to become complacent with our finances. If we aren’t
careful, we can make new money mistakes.
I guess that is true for every stage in our lives — we keep making
new mistakes. But we can also keep learning from each other and avoid as
many mistakes as we possibly can. Isn’t that why we read this blog in
the first place?
So here I am, compiling a list of potential money mistakes my 30-something peers and I should avoid. On the eve of my 40th birthday, I
don’t want to be thinking “I wish someone had told me this 10 years
ago.” I will start with the one that served as my wake-up call and got
this thought process going for me in the first place:
Buying too much for your child. I think every parent
makes this mistake. In fact, compared to what I see other moms in my
local mommy groups purchasing, I seem to buy very little. And what I buy
is more than plenty. So I can only imagine how much money people are
spending on cute clothes, shoes, blinking and screaming toys, even
educational apps. I (and other parents) should just save that money and
start a college fund.
Getting married without talking about finances. Maybe
money is a touchy subject for people; but by the time you have reached
your 30s, you should be more capable of negotiating difficult
discussions. It is extremely important to be on the same page with your
spouse when it comes to money. Otherwise, it can become a major source
of conflict in your married life and potentially the reason it ends in
divorce. Talk about finances with the person who will share your life
and develop your monetary goals together.
Still having consumer debt. I have heard of excuses
like “If only I were single, I would have paid off all this debt” or “I
was paying off my debt, but we had a kid.” There will always be some new
event in life; some exciting, some unfortunate. But if we choose to
ignore our debt, it can become an obstacle that prevents us from
pursuing opportunities that might better our lives. Take charge of your
debt! Budget aggressively, earn as much as you can, and pay it off.
Buying more house or car than you need. A lot of
people move when they have children, thinking they need more room with a
kid than they did before. They take the same approach with cars,
trading in their sedan for a big SUV. Why? We don’t need giant homes or
huge cars to raise kids!
Keeping up with the Joneses. Speaking of giant homes
and huge cars, people of all ages seem to be afflicted with the desire
to keep up with the Joneses — but unfortunately, it seems especially
common among 30-somethings. Maybe it’s the subconscious messaging of
television advertising or the desire to be accepted in our social
groups; but no matter what the reason, it is important to keep our
spending within our means, forego lifestyle inflation, and chart our own
financial course.
Ignoring a will. If you have a significant other or
any children, please make out a will or set up a living trust. It may be
unpleasant to think about death in your 30s; but you don’t want your
loved ones to go through the hassle of fighting the State to get what is
theirs. While you’re at it, get a durable power of attorney and
healthcare power of attorney too!
Not having enough life insurance. Again, no one wants to think about death; but if you have anyone that depends on your income or your time, you need life insurance.
And you have to get enough life insurance to cover the needs of your
dependents, not just the minimum offered by your employer.
Not having long-term disability insurance. In your
30s, the chances of becoming disabled and not being able to work are
higher than death. Most people have long-term disability insurance from
their employer; but you should calculate how much you need and then
purchase supplemental insurance. When it comes to insurance, life or
long-term disability, it is better to get your own policy and not depend
on your employer (unless getting your own policy is prohibitively
expensive for some reason). If you change your job, you will lose that
insurance and then replacing it will be that much more expensive. This
type of insurance is less expensive in your 30s than it is later in
Not re-evaluating your retirement goals. In your
30s, you have a new lifestyle; hopefully your income is different now
than it was 10 years before when you started saving for retirement. If
your income has increased since you formulated your retirement goals,
have you done the calculation on how much you need in retirement with
your new income and lifestyle? If not, now is the time.
Not paying attention to how your investments perform. You
might have started your 401(k) with a very basic money market fund with
the intention of learning about investing and doing a better job. Have
you done that? Have you studied how your investments are performing and
adjusted them based on your current goals and tolerance for risk? If you
need help, now would be a great time to find a fee-only financial
planner and see if you are on the right track.
Neglecting your children’s education. If you have a
child and intend to pay for at least part of their education, you need
to start putting money away for college now. At the very least, start
saving money in an online savings account until you fully research college savings plans.
Putting too much importance on your children’s education. You
should save for your children’s college tuition but not at the expense
of your own retirement. Make a budget, fund your retirement, and then
find ways to save more money to fund college.
Going back to graduate school for the wrong reason. I
am all for getting a graduate degree if it propels your career to new
heights. But if you are going to graduate school after a job loss to
avoid job-hunting or if you are going to grad school because you can’t
find a job with your undergraduate degree — particularly if you have not
researched job prospects after a graduate degree — then you are making a
huge mistake.
Not diversifying your income. It used to be that you
stayed loyal to your employer and in return they took care of you. For
example, each of my parents had one job throughout their working years.
When they retired from their jobs, they each had a pension. But since
that isn’t the case today, we need to find ways to maximize and
diversify our income. If you have a hobby that can make some money,
pursue that. Try to generate income from sources other than your job.
After all, job loss is no longer an uncommon occurrence and the only
person who cares about your future is you.
Those are the mistakes of which I am aware. Some of these are things I
notice myself doing and others I see happening with my friends. But
unlike the mistakes we are likely to make in our 20s, these are born
more from complacency, not necessarily naivete. The good news is that we
30-somethings can wake up, take charge of our finances and still hope
to achieve our financial goals.