Every person desires to get financially stable in their life. It takes good 5 to 10 years of vivid planning depending on the circumstances and your status to achieve strong financial stability.
Financial Challenges can be disarming, and if you do not manage your income, savings and investments well, it can be problematic for your future retirement too. Forecast your next 5 years from today and visualize where you would be. If you have visualized yourself as someone who is living a comfortable life, then there are some key financial mistakes that you should look out for. In your 30’s and haven’t started financial planning yet? Look through some of the mistakes that you should avoid in your 30’s for a more financially secure future.
Mistake #1: No Pain No Gain
It is human instinct that stops us from taking long winded routes. We find gratification in achieving quicker goals. For substantial gains, especially financially, you might want to start upgrading yourself. Relaying only on 9 to 5 jobs with the risk of uncertainty in today’s world, hovering on your head is not the smartest approach to financial planning. If you’re interested in upgrading your lifestyle, then you will have to be serious. Plan out your skills that work best for moonlighting gigs. Learn skills that you can use to earn extra money on the side. Plan out a small business that you can start up and run on the side till you have income rolling in that you would either want to invest or save. Go full time if you feel comfortable in letting go of your job and know that you can earn more with your side gig.
Mistake#2: Overspending = No Savings:
Cycle of overspending leaves you with no savings in your pockets. Start budgeting the money that you are spending on purchases and bills. With your 30’s come a lot of financial responsibilities. You will have to plan out your expenses to see how much you actually save at the end of the month. Overspending on impulses means there are no investments for the future. If you really want to be your own driver, start saving.
Mistake#3: Lack of Investment Portfolio:
If you haven’t created an investment portfolio, time is ripe right now! Seek investment opportunities to amplify your finances. Start with something small if you are hesitant to take on large risks. Look for financial advice and portfolio advice from different banks and companies, like Mutual Funds. Ask for their financial advisors and evaluate the ROI (Return on Investment) that you can earn from various options. Underestimating the impact of investments and its value on long term is one of the big mistakes that you can make in terms of your retirement. If you start right now, you have good few decades to build on your retirement nest.
Mistake#4: Not Using Credit Cards Wisely:
Overspending on credit cards is a mistake in any decade of your life. But more so in your 30’s. This is the decade where your financial responsibilities are growing and there are a number of financial priorities to cater to. Overspending on credit cards means always being out of budget to be able to prepare for the future. Work out a budget for yourself to plan your savings and investments today.
Mistake#5: Not Following Your Passion
Never wait until you reach in your late 30s to realize “Oops! This career was not meant for me”. Think immediately if you are on the right track and follow your passion and dreams. This can save you time, hassle and money to switch from one career to another. If you are stuck in a rut at work knowing this is not what you want to do, then it is also difficult to progress in your career as you have no passion to move ahead with the current career path. Decide early and move quickly. In the local market, it becomes difficult to move to your choice of career once you’ve already crossed your 30s and are part of the middle management.
Mistake#6: Not Switching Jobs
Good HR personnel would want to negate this fact, but switching jobs can actually be beneficial to your career and to your pocket. Being in the same organization on the same career ladder can be detrimental because income and salaries within the organization grow slower than the rest of the market. You can always evaluate options that are giving you a good salary package, and that give you a boost in your career too. All the funds that your provident fund or gratuity collected, can be put to better use according to your own risk and return profile as well.
Mistake#7: Spending On Expensive Tastes:
Expensive tastes not just include designer bags, shoes and watches. Expensive tastes include luxury car purchases, living in an expensive rent apartment, and more. These eat at your pocket and make a dent in the income you earn. To manage expensive tastes, invest and then buy. If you buy right now, you won’t have investments to manage larger expenses in the future. Expensive tastes often require expensive maintenance as well.
Mistake#8: Take Major Loans From Banks:
While loans can be a great key in managing expenses towards a sound investment like buying a house, racking up loans to manage a high lifestyle can be detrimental to the pocket. This is a mistake that people in their 30’s make when they see some of their peers managing better in terms their lifestyle, their residence, and their expenditure. Plan your budget well, pay off your loans and evaluate the kind of lifestyle you can manage within the means of your income.
Mistake#9: Not Availing Insurance Benefits:
Insurance Plans within Pakistan provide numerous benefits. Health insurance can help cover hospitalization while life insurance can help cover benefits and earn returns, or provide benefit to the beneficiaries as well. This is a key mistake amongst people in their 30s as they do not believe medical or life insurance is necessary at this stage.
Other types of insurance such as vehicle insurance, and the lesser known, but oft-necessary, phone insurance are also elements that you should explore. In today’s world, several cities in Pakistan have seen a surge in phone snatching. The year 2016 witnessed at least 34,000 registered cases of phone snatching compared to 21,000 in 2015 (Karachi only). These insurance plans can be reasonably beneficial in replacing your lost car or phone in case of need.
Mistake#10: Overspending On Children
People in their 30’s overburden by spending on their children far more than it may actually be needed. Fulfilling every wish of your child will teach them to anticipate that every wish is fulfilled, and build a sense of entitlement. Children should be taught to earn specific wishes, so that they can understand the importance of working towards a certain goal. This will also help you to align your expenses with your budget instead of having to give in to whims.
Being in your 30’s isn’t as dire as it sounds. The right approach towards financial planning, and avoiding the above mistakes, can help you to pave a better path towards a strong and independent financial future!