In your 30’s there’s a major shift in priorities. You might start to consider firmly establishing yourself in your career or business and even start thinking about building a life with a partner and planning for your long-term future.
You’ll have to make several important financial decisions that will lay the foundations for your financial future. There are so many money traps that can get in the way of your financial freedom without you realizing it. These are 5 common money traps you should avoid
1. Buying a Car That’s Out of Your Price Range
Don’t buy a fancy car just because you can. A car loses about 30% of its value in the first year, and they are actually liabilities unless it’s used as a source of income (Uber, bolt). When considering your options, choose to spend wisely. Think what the extra funds could do to either help you save or invest more money.
2. Buying a Home That’s Too Expensive
The more expensive the home you buy, the higher other expenses will be (utilities, repairs). It will take away money you could be investing elsewhere and leave you constantly scrambling to cover your expenses. Don’t fall into this overspending trap. Buying a less expensive house than you can afford will enable you to comfortably afford your house payment if one income source is lost.
3. Spending Too Much Going Out
Budget for your entertainment and stick to it. Give yourself a little room to spend on the things you really want to do but keep it under control. A little forethought will go a long way toward reducing your stress over finances. Develop the discipline to save and invest instead.
4. Having an expensive significant other or friends
One of the biggest mistakes you can make is not having an open discussion about finances with your partner. It can be a major cause of relationship and financial trouble. If you keep company with free-spending friends, you might get caught in the game of trying to keep up. Don’t let other people’s expenses take away your ability to plan effectively for the future.
5. Not Investing
The earlier you start putting money away, the more time you will have to take advantage of the wonder of compounding. Investing too conservatively in your 30s can also rub you of the returns on your portfolio you need to get. Long-term investing is a marathon, not a sprint. Don’t get caught up in short-term investment gains that might leave you in financial distress.
What’s next
Any one of these mistakes has the potential to put you in financial distress. Even with a relatively high income, it might leave you scrambling later in life. Life moves fast, and you don’t want to lose track of your goals in the process. Think of this article as a map to help you bypass money traps and ensure you’re set up for financial freedom in the years to come.
When money realizes that it is in good hands, it wants to stay and multiply in those hands.
― Idowu Koyenikan
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