Biggest Money Mistakes to Avoid in Your 30s

it's Brian Preston the money guy let's talk about 30 year olds 30 year olds are a little wiser there's a little more jingle in your pocket hopefully yeah and this is hopefully the decade that you're starting to have some achievement in your career your life you you're starting to feel like things are making a little more sense yeah you're you're figuring life out you're in your 20 in your 20s I know and I'm stereotyping but I'm basing this off of my own self is that you you come out of college and you feel like you're going to attack the world and you have this feeling that you know a lot more than you probably do but you also get bewildered because you feel like the world's working against you because of your age I mean I felt that way but it's probably because when I was 22 I looked like I was 17 you know super skinny it's hard to get people to take you serious so you get into your 30s you're starting to show a little age you actually also have some wisdom to you experience so so it this is hopefully where you can start really getting some traction on things you can also this is the age where you can still take big risk without and still have time to recover if it all falls apart so really exciting time to be a thirty year old so let's kind of jump into this so here's some of the biggest mistakes that we see folks make in that thirty biggest mistakes thirty year olds make and I put this one on purpose as number one and I've picked on 20 year olds about this because they're the ones that got us our 20 year old self usually got us in trouble to where this hurts the 30 year old is that getting divorced yeah and I just kind of sends waves down me because it's getting divorces expensive it stinks from a life perspective but it's also a really hard difficult bad financial decision yeah it's um typical avoid divorce occurs according to the statistics when you're thirty years of age eight years of marriage so like I said you made the decision probably in your 20s but here's the thing when you think about financially what does this mean for you that you have to make have a 30% increase in your income to cover what you're married self cost so the same standard of living as when you were married so if you think about this if you are making $50,000 to have the same lifestyle as your $50,000 or so as a married person you'd have to have $71,000 to keep the same lifestyle because think about all the things that you're splitting if you're a two-income spy you know household is now following on your shoulders and plus you got to carry this burden of paying off the divorce attorneys and all the other stuff so if you can avoid it avoid getting divorced make the decision as your twice before you make those big life decisions I picked on the 20 year olds about that previously the next thing I put on here the financial mistake is not playing for the long game what do you mean by that I think this is the beautiful age where you do have skillset you've now hopefully worked in your industry five seven years you got ten they're an expert 10,000 hours you're an expert now you since you've taken that decade of your 20s and absorbed and become the version of yourself that you wanted to be now you need to ask yourself okay am i doing what I'm supposed to be doing am i living where I'm supposed to this is the part where you really need to start vision planning for what is my long-term self and wife going to look like I don't know that a lot of people some people don't make those decisions until they get to older and and I'd love for you to a tackle that because this is the the foundation of becoming a planner if you're thinking about these things in your early 30s believe me your version of yourself in your 40s 50s and 60s is going to be very happy because these skill set are becoming a plan or pays off would you agree with this statement run that if you don't ask yourself these questions in your 30s you likely will ask yourself these questions in your 40s but at that point you might not be able to make the same adjustments that you could have anywhere you can make a very small move in your 30s I come from an income perspective or you know and it it just doesn't seem like that much of a hardship right whereas when you have to make decisions in your 40s and 50s to get your financial life on track you'll find it gets much harder so I mean you have to instead of it just being an incremental slight move now you're having to move mountains to make changes and I'm not trying to downplay my 50 year olds who have to make a big decision but it's just so much easier when you're in your 20s and 30s so this is the point where I'm going to challenge you are you aving enough you know think about these things because it will definitely be the tell that you drag around for many years to come if you can make those hard decisions when you're in your 20s and 30s I thought this one was important though you probably you've always done a good job when I hear you talking to prospects so you talked about this on shows not assure not ensuring away likely risk that's a big mistake I see you yeah through that all the time folks you know it's easy in our 20s to think that we are young and invincible and and and some of the things we don't need but in your 30s when you start to have people depend upon either your income or your ability to provide shelter provide food it does become necessary that you have to kind of put put on your big person pants you have to go buy those insurances you have to go make sure that you do have adequate life insurance our rule of thumb is 10 times your income is a pretty pretty solid bet do you have disability insurance you are statistically more likely to be disabled than you are to prematurely die and so disability insurance is you want especially if you have somebody depending on you want to make sure you have that in place is your health insurance where it needs to be to provide for you and your family are you taking advantage of tools like health savings accounts maybe you have access to it you didn't pay attention for the past few years that's a huge triple threat savings opportunity we have an entire show dedicated to health savings account so go the money got comfortable tax advantage that's it go money guy.com look up health savings accounts and you'll find it and then what about on your home and auto side are you adequately insured on your auto insurance do you have an umbrella policy in place it's amazing how many times Brian I get on the phone with someone who's in their 40s and maybe they have seven figure portfolios but they're lacking umbrella insurance and it's just something that makes all the sense in the world to have in place it's cheap if you have assets or if you have earning potential I think those are the two things that it makes sense in your third is when you really have to start getting those things in place and here's the cool thing when you're young in your 30s you're typically healthy so all the things that we were talking about like the life insurance the disability insurance and eating you're now getting to the age where you're old enough that your auto insurance your homeowners insurance is cheaper but it's the perv it's a good time to be covering these things because they incrementally don't cost a lot from a cash perspective it's really a lot of bang for your buck in your 30s to ensure away risk and it builds that habit that will serve you well many years in the future here's one that I was guilty of and Bo I I have told you Tom and Tom again and you finally I think you've caught on in the last two years slow down take a deep breath and enjoy the season you're in because seeking complicated / sophisticated because you to perceive that is what success or what wealthy people do don't don't fall into that trap that is a trap by the way guys is because sophisticated or I should just keep it simple and say complicated is what I think a lot of young people think that they have to do to act like somebody who's rich but you're gonna find complicated finds you naturally your life if the more success you have it's going to just find you one day you'll wake up and be like man doing taxes is a lot harder now than it was when I was a 20 year old don't accelerate creating complexity just so you can feel cool about certain about yourself because nobody here's the thing I think that I fell in this trap is I was like man having a k1 because I bought ownership into something would be a lot cooler they were doing rental property and all this other stuff because that's what I need to be doing but what you don't realize is is that some of that stuff you're just asking for trouble down the road because like I said your life you're going to find opportunities and things are going to happen so so understand what you're getting into for the basic foundation of the financial you know where with all our goodness of the investment versus it just seems sexy and cool to do this behavior yeah you know I personally I always wanted to be really really busy until I got really really busy it was all wishing for but we do this all the time since you are 30 since you do have some wisdom about you now and you've kind of seen some things out there you start thinking maybe I do need to go get involved with that private placement maybe I do need to go by that fancy insurance policy that I don't really understand but I think it's good because this colleague told me it was good make sure you understand the things that you're investing in and where you're putting your time I'm in your effort because you're gonna get busy and it's much easier to not make those bad decisions have to unwind them later then to make them and have to deal with it in your 40 we probably didn't talk about it enough during the 20s but 30 year olds I'll give you the the pick-up advice that I should have probably given to the 20 year olds too is that be careful when you don't know basics on investing is that you might get sold something perceived as sophisticated or sexy that might not be in your best interest so do a lot of due diligence on investments I think there's just so many opportunities with target-date retirement funds index funds yeah keep it simple while you're getting your foundation you know beneath you and getting those army of dollar bills going don't you know if you get the the spidey sense that somebody's going to be profiting off of this product that they're recommending to you you can always ask them what do you make off yeah that's a great you know ask people what do you make off of this and that's going to give you probably cut right to the heart and you'll figure out really quick based upon if they're able to calmly answer it and it seems reasonable or if all of a sudden gets very shifty and you get told crazy things like well you don't actually pay me anything the company pays me you know it goes into it's just like when you do deal with the real estate and you hear the sellers paying closing cost you like I'm still paying you're you the buyer are still paying those closing cause it's just baked into the purchase price so you understand it works that way with financial products as well this is a big one bow faking success and it ties it dovetails nicely into that previous one we just talked about faking success by paying for life two hundred dollars at a time what do what do I mean when you hear me say faking success with two hundred dollars at a time yeah so at thirty our income is increased or maybe a little more Jing a little more comfortable and so two hundred bucks a month for that boat payment or for that Country Club membership or for that nicer luxury car I can afford two hundred dollars a month and very often folks in your 30s when you do have some discretionary cash flow you start adding up monthly payments not adding up total obligations and you can get yourself in a lot of trouble I buy new house in your 30s and you say yeah instead of decorating the house or putting furniture in the house over for years yeah just going out there and doing it all at once because you say yeah it's only $200 a month plus they let it defer it out for six years seven years no you can fake your wife $200 a month but here's the thing that $200 a month for this car you know store credit card the car loan the nicer car you put $200 more you just keeps building on top of yourself before long you go I got more debt my payments my minimum payments for credit cards and all these debt is more than I even may that's what it breaks you that's why you never get to work for yourself here's the thing that a compounding interest is one of the the incredible powerful forces out there in the world you've heard me say for the 20 year old it's 20 or the 25 year old now we're soon gonna be talking about the 30 and 35 year old investor you get a huge multiplier effect if you get in debt that multiplier effect that compounding interest actually cuts against you so let's keep it on the positive side and not get yourself in that that bad life just because you're faking success you the good things that the the spoils of your labor and of your success will come I promise that the squeeze of the fruit you're getting that juice at a later Tom I always put this one this is let's talk about the investing continue to procrastinate on saving and investing for the future yeah 30 year olds you know we often say oh we're still young yes that's true but not as young when you're 20 yeah I mean the 20 year old like we talked about in the previous let's give some perspective here I said a 20 year old every dollar earning 10% because I think in a 20 year old can have that type of beer that aggressive with their portfolio for 30 year olds I brought it down to nine percent I took a little bit off I took it from ten to nine percent you'll notice I'll do it on the 40 year olds I'll take it down to eight okay so I did nine percent now you know you were assuming you work until you're 65 every dollar that thirty-year-old saves it's going to be 23 dollars when you're 65 so it's still pretty incredible in context one dollar turns into twenty three but it's not eighty-eight dollars like a twenty year old or $54 like a 25 year old a thirty year old now it's twenty three and four thirty-five-year-old each dollar that you're able to invest is worth 15 still incredible if you think about every dollar invested going to have a 15-time multiplier that's awesome and but but recognize this is the pie the last stop on that train of huge double-digit exponential growth where the assets will work for you still gonna be good in your 40s and 50s don't get me wrong you're still going want to save but this super this is the time where you really are getting to put a lot of multiplier effect on it but this is also we kind of talked about this a little bit when you're in your 30s you start having a little bit of success you got a little jingle this is in your pocket this is when you might in addition just being susceptible to somebody selling you something you might be susceptible to thinking man I'm so smart yeah and this is when you start thinking about day trading I love I've watched CNBC I know how to stop market great trading individual stocks stock options the worst thing can happen with stock options is you make money on your first investment in stock options true this where think happened agents house I've lived that mistake you know I've played around with some stock options turned a few hundred dollars into a few thousand and then you're like man this is what I ought to be doing with every dollar of my money and then you quickly realize you might be right on your decision but the timing might be just off just enough to where you take it to zero that's right I'm not going to pick on the companies that we did that on but the problem with option investing is you could be exactly right with your observation on either company's overvalued or company's undervalued but if it doesn't hit it in the window when that option is good or the timing cuz realize the longer time goes just like it chases you down until you die and leave the earth option time is much more accelerated though the closer you get to the expiration of your options the the less value your options have so like I said the worst thing can happen with an option investment is you make money on your first one because then you think you figured something out so avoid falling in that I'm so smart transaction also you know we talked about this all time I do think you 30s I really harp on this for my 30-year olds you should hopefully be saving fifteen to twenty percent of your gross income for the future hopefully even pushing it towards twenty five percent of your gross income by time you leave your thirties because that's the money like I said you get that this is your last stop on the big multiplier effect the more money you can have working for you at a younger age the more you're going to be benefited in the future I've shared my philosophy me and my wife came up with that we really really tried to prioritize saving in our 20s and 30s so that when we hit 45 or 44 we could pull off the throttle a bit and actually start enjoying this money because the army of dollar bills is doing what's supposed to and growing for us so make sure you're doing that maximize that company retirement plan go ahead and max out that Roth IRA if your income allows for it and if you make too much money for the Roth IRA you might still be able to do Roth contributions as well as that we won't you know you can't go into all the details on this because it's not a one size fits all but you could definitely reach out to us on the contact us page and we can help you out and you should also be definitely closer to that three to six months of emergency reserves and then here's the last mistake I left this one on purpose because I want to close with a punch on my thirty-year-olds bow is that a lot of people make the mistake when you have children you prioritize saving for their education more than you do for your retirement yeah we see that a lot there's a problem with that there is an entire industry for getting your kids through college if you think about you can get scholarships you can get grants you can get student loans and even though student loans are very scary there is an industry where at least you know your kids can do coops where they work when you hit retirement age you get Social Security you may or may not get a pension you may or may not get Social Security either about that way but um the rest of its kind of on you there's no loans for retirement there's no retirement loans no there they can go do a reverse mortgage and some other crazy hell marry type things but I'll talk about those in a set of them are great examples of opportunities that you get excited about it so make sure your Porritt izing saving for yourself and your retirement first before you pay for your sons or daughters education believe me your sons and daughters will thank you when you're not living in their basements right because you're your self-sufficient on your on your own so try to avoid and get your priorities right on where the money needs to go when you're in your 30s on the kid so that kind of brings to a close the the financial mistakes of 30 year olds and we could go on and on because this is such a valuable time in your life guys 30 year olds this is like I said when you're setting that foundation where you you know I get the 20 you know people kind of enjoy their newfound getting out of college their independence their freedom in their 20s so it's not uncommon that people kind of wake up and when in the 30 year old self and start getting responsible about things go and learn from these mistakes we said for 30 year olds and turn it into something positive for yourself and I think that you'll just be lightyears ahead of your peers who kind of let that party from your 20 year old self carry on into the 30s and then they get the wake-up moment in their 40s and here's the thing when you get your wake-up moment in your 40s might not have as much Tom so that leads me to a great point we've recognized this show ran longer than we anticipated because I mean it's just a lot of lovin on mistakes to avoid and we want you guys to avoid it so we're going to turn this into the the financial mistakes by age we're gonna do part 1 and part 2 so this brings the close the part 1 version will come back you know in for our next show next week and do a part 2 of this so the podcasts will be broken into two sections but here's what I want you guys to know you can sense there's a passion that we want you to make good financial decisions with your money so reach out to us you know let us know if this stuff is it do you resemble this or is there something here that hit you in a certain way that now is going to help you reevaluate some of the decisions you were considering making I want you to reach out to us go to money guy com go to the contact us page we love getting feedback from our listeners we we actually read everything you guys send us so thank you thank you for you and reaching out and considering sharing was and that's how we feel like this is the money got family I'm your host Brian Preston we'll be back shortly with part 2 so my 40 year olds my 50 year olds and my 60 year olds will know how to even make better decisions to grow and know what they need to be doing so that they can have the life that they've always dreamed of

Channel: The Money Guy Show

Views: 45,698

Keywords: Biggest Money Mistakes to Avoid in Your 30s, the money guy show, money mistakes to avoid, biggest money mistakes, biggest money mistakes by age, budget, financial advisor, financial mistakes to avoid, financial mistakes, bad money choices by age, money mistakes, money, personal finance, debt, finance, bad with money, financial, money decisions, money management, bad money decisions

Id: o9Jpiy4f--M

Length: 20min 9sec (1209 seconds)

Published: Tue Jun 19 2018