In your twenties, you might want to be radical and change the world, but in your thirties, you might just want to be happy and ground yourself.
— Jonathan Krisel, writer and director of Portlandia
There’s no reason to stop wanting to change the world beyond your 20s — and aiming for happiness and being grounded are good goals at any age. One valuable thing to do in your 30s is to start paying attention to your finances and setting yourself up for a more financially secure future. Doing so can boost your happiness, helping you feel more in control of your life — and grounded.
Image source: Getty Images.
Here are seven investing mistakes to avoid in your 30s:
1. Racking up credit card debt
This is a big problem for many people, because once you owe tens of thousands of dollars on your credit cards and you’re being charged steep interest rates, as credit cards tend to do, it can be hard to pay it off. Often, it’s impossible to make any other progress in your financial life, such as saving and investing. Consider, for example, that owing $30,000 at a 20% interest rate means you’re forking over around $6,000 annually in interest alone.
So try not to rack up much debt, unless it’s for a mortgage or something like a car loan with a relatively low interest rate. If you already owe a lot of money, pay it off pronto. It may not be easy, but you can pay off your credit card debt — many people have succeeded at it.
2. Not living below your means
In your 30s, it’s a perfect time to start living below your means if you’re not already doing so. Stock an emergency fund with enough money to cover your non-negotiable living expenses for at least a few months, and then spend less than you bring in.
It can be useful to create a budget reflecting all of your household’s cash inflows and outflows. Seeing exactly where your money is going can help you identify places where you can rein in spending so that you can save more.
3. Not participating in a 401(k) plan
If your employer offers a 401(k) plan and you’re not already participating in it, it’s time to start. And if you are participating, see whether it makes sense to increase your contributions. When it comes to contribution limits, 401(k) plans are very generous. For 2021, the limit for most folks is $19,500 — plus an additional $6,500 for those 50 and older.
If your employer offers matching funds, be sure to contribute at least enough to your account to max out that match, as that’s free money.
Image source: Getty Images.
4. Not earning as much as you can — so you can invest
In your 30s, you’re approaching or in your prime earning years. It’s worth trying to earn as much as you can so you can invest as much as you can. Your earliest invested dollars are your most powerful ones, as they have the longest period of time in which to grow, and the longer you regularly invest, the more you can amass.
The table below should inspire you, showing how big a portfolio you might build over time. Those in their 40s or 50s may not have 20 or 30 years ahead of them in which to save and invest, but those in their 30s generally do.
Growing at 8% for
$10,000 Invested Annually
$15,000 Invested Annually
