Your 30s are an important period for your finances, so it’s important to make sound decisions based on this. Here are five financial mistakes you need to strive to avoid making in your 30s so you have a good chance at a bright future.
1. Not Having Life Insurance
Life insurance is non-negotiable, and getting the right one is crucial. Do thorough research to find the best one for your needs so you can get enrolled in it. If you have dependents, it’s even more important to get good life insurance as it will make life easier for them if something were to happen to you. Find out what the rules on inheritance are in your state so you know the best decision to make with this in mind. For instance, 38 states don’t impose a tax on inheritance or any tax on an estate after one passes on. If you’re in one of these states, you may have a good idea of how things will be for your dependents and be better able to secure their future.
2. Not Making Use of Health Savings Accounts
Health care can be very expensive, so it’s a good idea to avoid being in a situation that leaves you broke as a result of a single medical emergency. A health savings medical account allows you to set aside money for health-related expenses free of tax. Look for an insurance plan that allows for a health savings account which will be the equivalent of getting a discount on your health care costs when you need to get treatment.
3. Cashing Out an Old 401K
As tempting as it may be, resist the urge to cash out old 401ks. When you switch jobs, for instance, and end up with some money in your 401k, don’t cash it out to settle a debt as this will be cheating yourself out of a tidy sum in the future. Take note of the fact that 41% of buyers who made a purchase never thought that they would regret it but ended up doing so, while 30% of buyers were neutral before they made a purchase but came to regret it. Think about your expenditure carefully so that you make the best decision possible.
4. Piling on Debt
Another big mistake you could make with your finances in your 30s is piling on debt instead of working to reduce it. Additional student debt, expensive mortgages, and a lifestyle that you can’t afford are all things that work towards creating more debt in your future. This can cause issues with your ability to budget effectively by affecting your cash flow. Only make purchases that you can comfortably afford and minimize your risks of adding to any debt you may already have. Doing this will make it possible for you to live within your means and get a better chance of saving for your future.
5. Not Saving Enough
The fifth mistake that you could make in your thirties is not saving at every possible opportunity you get to do so. Retirement is not a far-off concern when you’re in your 30s, so make sure that you have emergency savings in place. Use the help of an application or even take a financial course to become a better manager of your finances. Ensure that your home is in good shape, as are all appliances and cars in your possession. This will help you avoid incurring excessive extra costs that may come as a result of letting your basic necessities fall into a bad state. For instance, your home’s roof should be inspected once or twice annually under normal circumstances.
Avoid making these five financial mistakes in your 30s and you will be likely to secure your finances for the future.