5 Critical Financial Problems You Must Avoid in Your 30s

 In Personal Finance

Financial Problems

By the time you’re in your 30s, you expect that financial problems should be in your past. You’ve learned about financial mistakes in your 20s, about money management, investing and what you should and shouldn’t do.

You think yourself savvy and smart with your money. However, there are quite a few things that you might be doing that are not only shortchanging your financial situation right now but might be sabotaging your future.

Let’s take a closer look at five critical financial problems you must avoid in your 30s.
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Saving for Your Child’s College without First Planning for Your Retirement

As Trent Hamm points out in an article for Yahoo Finance, parents who plan for their child’s college tuition without first laying the groundwork for their own retirement are shortchanging themselves and possibly setting their kids up for big financial problems down the road.

After all, what will happen if you lack money in retirement, but your child has a decent income? Who might be moving in with whom?

Yes, you might be able to help ensure that your child doesn’t have to deal with high student loan debt after graduating from college, but the costs of supporting you and your spouse in your “golden years” could very well be much higher than what they’d spend paying back student loan debt.

Make sure you have your retirement plan in place and don’t rob Peter to pay Paul. Keep your college tuition savings and retirement funds separate, and make sure you’re not funding one at the expense of the other.

No Disability Insurance Leads to Financial Problems

You’re probably sick and tired of paying for all the various types of insurance you need. You’ve got health insurance, auto insurance, home insurance, travel insurance, dental and vision insurance, and more.

Adding disability insurance to the pile might seem like a bad idea, particularly if you don’t live a high-risk lifestyle or work at a job with high risks. However, understand that accidents can and do happen to absolutely everyone. If you are not protected by disability insurance, you could find yourself incapable of working, without any way to pay your bills or generate income.

The best option here is to own your own individual long-term disability policy with more benefits that you can carry with you from one job to another (which ensures that your protection is not tied to one particular employer).

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Not Buying Term Life Insurance

Yes, life insurance is one of those expenses that most people think they can do without, particularly during their 30s. After all, you’re still young, strong and healthy. Why in the world would you need something like term life insurance?

Actually, this is a vital form of protection for your children, particularly if you unexpectedly pass away. Death benefits are relatively low cost, and they can mean the difference between success and poverty for the children you or your spouse leave behind after you die.

Too many people (in their 30s and at just about every other age) prefer not to think about death. It’s a depressing subject, but one that we’ll all have to deal with at some point.

By buying term life insurance now, when you’re young and healthy, you can lock in lower rates than what would be available if you waited until you were older and death was actually a looming possibility.

Every single parent should have a 20-year level premium term life policy to prevent their children from becoming paupers in the event of their demise.

Not Planning Buffers

You’re smart enough to create a monthly budget for your family. You don’t live paycheck to paycheck. However, do you have buffers in place to account for the inevitable fact that anything that can go wrong, will go wrong, and usually at the most inopportune time?

Murphy’s Law is in full effect, and there are always shortages, overages, and limits exceeded that ratchet up your costs of living. Plan buffers to ensure that you’re adequately protected financially.

That applies to everything from automotive maintenance to home maintenance to savings to tide you over should you be laid off from your job. Yes, planning those buffers takes time and might mean that you need to sacrifice in other areas of your life, but it’s well worth it.

Failure to Create a Written Financial Plan

Yes, you have financial goals. You have an overall strategy to get you from where you are now in your 30s to where you want to be down the road. However, do you have an actual written financial plan, or is all that information locked up in your head?

A written financial plan can serve as a guide to help ensure that you stay on track as you earnб and to help you from becoming distracted from those all-important goals. If you don’t have a plan, then you lack a roadmap to success. You have no way to tell where you are, much less where you’ve been or where you’re going.

There is no GPS system for financial planning, so creating an actual written plan is essential. No one else is going to do it for you. No one else can. Base your plan on an accurate monthly cash flow statement, include all your regular expenses, and plan a little leeway for fun things or impulse purchases.

There you have them – five of the most crucial financial problems people in their 30s will encounter. Of course, they’re not limited to 30-somethings. Whether you’re in your 20s or your 60s, you can implement these tips to help ensure a strong, vibrant financial future for you and your family.

The only reason for failure is to not take these tips seriously and make financial mistakes even though you’ve been warned.
saving for retirement

Sergey Sanko
Sergey had started an IncomeClub after years of being an investment advisor for high affluent investors and managing fixed income securities. He is the lead investment advisor representative and holds a Series 65 license. Sergey earned his Executive MBA degree from Antwerp Management School.
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