Your thirties are the most critical decade in your life. This is because you are still young enough to put in place investment strategies that can improve your financial standing in the future.
There are many money traps you can fall into in your 30s as you are still young and learning. In these instances, remember the famous quote from Warren Buffet, ‘Never lose 
’ and rule number 2, ’Never forget rule number 1’. Apply this advice to your financial life and you can avoid common money mistakes people make in their 30s.
Lack of income diversification
Individuals in their 30s place a major focus on their job without realizing that they could find themselves out of a job anytime. Diversifying your income and investment portfolio is a chance to broaden your interests and explore different areas. When it comes to making money, it is okay to have something on the side. Having multiple income streams means that you have more money to invest and save for future projects. Pour all your time and effort into establishing your income streams, as this is what differentiates the wealthy from the rich. The earlier you get started the better is key!
Too much credit card debt
Credit cards are a quick fix when you need money to get through your next paycheck. Credit cards are not necessarily a bad thing as they are a useful tool in helping you establish creditworthiness and points in making online purchases. Yet, they offer a money trap when you make financial mistakes such as impulse purchases on things you had not budgeted for prior and you really do not need. Credit card companies make their money off these mistakes as there are infamous for their fees, interest rates, and hidden rules in the fine print. Credit card companies play number tricks on consumers. It may seem as though you can afford the payments because they are small relative to your income. But if you pay attention closely over time is where they make their money off of you. The longer you take to pay back the more interest that they charge and in turn you end up paying $200 spread out in interest over time, instead of the $100 original price of whatever item as an example.
In your 30s, work towards getting rid of existing debt and monitoring your credit. Your credit score is important as you will soon start considering taking up a mortgage to buy a home for your family or renting. Keep your budget less than your income to break the cycle of over-dependence on credit cards. I recommend keeping track of all expenses over a years period as well as all income that you make as well. This will give you an overview of whats coming in and whats going out. How much you can save as well as how much you have spent. All of that in turn helps you make better financial decisions going forward
Buying a home that you can’t afford
Not buying a home for people in their 30s is one of the biggest financial regrets. Owning a home that increases in value is a practical expense but can have diminishing returns. Most people find themselves challenging all their money into mortgage repayments that they cannot really afford, leaving no money for emergencies or savings.
Go by the standard mortgage rate rule that states that no more than 28% of your income should go for housing and 36% for total debt, including the house payment. This will allow you to save more money and may enable you to comfortably afford your house payment if you lose one source of income.
To avoid being caught up in the mortgage money trap, keep an eye on the local market and buy when you can get a home at a reasonable price that you can easily handle.
Buying a car you can’t afford
Car owners in their 30s have the highest levels of car debt. If you have an expensive car with a high interest rate, consider trading it in. Remember, a car fresh from the manufacturer loses about 30% of its value in the first year and half by the end of the first three years. With this in mind, do not buy a fancy car to impress people, just because you can.
To ensure you are not burdened by high repayment interests in your 30s, you can consider buying a used car. This is because the repayments on second-hand cars are usually cheaper by half than on newer cars, and you are still driving the same car version. The smartest most efficient way that will save you money in the long run would be to just simply save enough for a good relieable used car and buy it. That way you don’t have any payments and your insurance will be low. By getting a used car and keeping and maintaining it you also learn your car and how to do various simple maintenance for it thus saving you money you don’t have to pay someone else to do it for you and time as well.
Spending Too Much Going Out
Everyone wants to have a good time and indulge in entertainment. Control these expenses such as dining in, movie dates, and miscellaneous spending by budgeting prior. For example, if you have been spending $1000 on entertainment, consider reducing it by half and develop the discipline to save and invest the difference. Steer away from hanging out with expensive friends, as this is detrimental to your finances in the long run. Try to steer your social contacts towards less spending activities as it will help both you and your friends to steadily develop financial consciousness. There are ton of free things and less expensive things you can do. Fishing, going to the park or just simply hanging out and using that time to figure out and come up with ways to make money or develop ideas for making a product or a business.
Investments to Make in Your 30s
Investing in your 30s is one of the profound financial decisions you can make to secure yourself for the future and even in retirement. At 30 years, you are still young and should take investment risks that will lead to higher returns in the long term.
Stocks and index funds
Stocks allow you to diversify your investment portfolio by investing in companies of different sizes and industries. Consider investing in index funds that contain dozens of stocks and watch your growth rate increasing over the years. To diversify further, ensure you put together several funds, one that gives you exposure to international markets and one or two that invest in US small and medium-sized companies.
Also, buy bond funds as prices tend to move in the opposite direction of stock market to balance the risk of investing in stocks. Their rate of return is lower compared to sticks but considered a safer investment option.If this sounds hard to manage, get a robo-advisor to build and manage your investment portfolio. Or you can just do the work and research for yourself and in the process you ‘ll learn so much more about yourself and your finances
Utilizing tax-advantaged accounts
Take advantage of these accounts are they are designed to help you invest for your retirement and are exempted from taxes. Starting your retirement plan now will help you feel less pressure in your 40s. Set aside 15% of your income for your retirement, and if you are able to do so, set up your 401(k) contributions upwards. These contributions lower your taxable income and an increase in your contribution will not cut into your take-home pay as much as you expect. It is a good idea to combine a 401(k) with a Roth IRA, an individual retirement account, to have a good kind of tax diversification. If you are a high income earner remember these retirement investment vehicles will save you whatever the max is that you can put into them on your income taxes.
Cryptocurrencies
Many young people consider cryptocurrencies as a scam, but there is no denying the enormous potential they possess, such as when their prices sky-rocketed in 2017. Consider investing in cryptocurrencies as a high-risk, high reward diversification to your portfolio when you are still young. It is a valuable addition but still highly speculative investment that will give you another dimension to your balanced portfolio.
Parting Shot!
A portfolio with diversified investment will ensure you make the most of your money in your 30s, even if you do not have much extra money to invest. Ensure you are disciplined and consistent in whatever plan you decide to implement. Consistency is the key and you’ll enjoy financial stability that comes with investing at a young age. No one cares that you dont have enough money start somewhere then continue to build!