Those who are in their thirties need to come to the realization that the financial decisions made now will affect the remainder of their lives (and potentially the lives of their children). Unfortunately, there are some common mistakes that can literally cripple one’s financial future. Let us take a look at five pitfalls and some of the ways in which they can be avoided.
The Dreaded Premarital Financial Conversation
Many couples that plan on marriage will avoid discussing money to any great length due to fear, embarrassment or privacy concerns. This can lead to conflicts and financial woes further down the line. It is therefore critical that important topics such as pensions, investment plans, savings and shared expenses all be discussed.
Putting Off Retirement Savings
It seems only natural that those concerned with student loans, securing a lifetime job and maintaining a positive credit score are less concerned with a retirement package that is decades away. This can have dangerous consequences in the future. Planning these savings now will help to avoid straining (or even crippling) a budget later.
Spend Now and Forget Later
Younger generations (particularly in these modern times) have the tendency to spend an inordinate amount of money on fancy cars, large houses and other lifestyle upgrades. This can be a big mistake, for there is no guarantee that present liquidity will exist in the future. Thus, dangerous levels of debt can suddenly appear. It is best to remain somewhat reserved and not succumb to these temptations until a sense of true financial stability is achieved. For example, those who choose a condo for sale will spend much less than purchasing a standalone property that is ultimately beyond their means.
It is quite easy for those in their thirties to simply assume that the money will always be there when they require it the most. This is not always the case. Markets can change. A job position may be made redundant. Unexpected expenses could appear which will strain an already burdened budget. Never forget that tapping into private funds intended for the future equates to acquiring debt by its very definition. It is best to remain frugal (within reason) and to eliminate such debt now, for there will be more financial “breathing room” later.
The Education of a Child Versus Retirement
Many new parents will focus on placing money into a child’s future education instead of enhancing their own pension plan. Although this may seem like a noble cause in regards to student loans and the learning experience, failing to provide for one’s retirement may eventually cause the parents to become a financial burden to their children later in life. Retirement should be considered first and educational funds must only be allocated if they are available.
These are five common mistakes that those in their thirties will often make. Being aware of their existence will be the first step towards avoiding financial hardships in the future.