7 Investing Mistakes to Avoid in Your 30s

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.

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.

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

$20,000 Invested Annually

5 years

$63,359

$95,039

$126,718

10 years

$156,455

$234,683

$312,910

15 years

$293,243

$439,865

$586,486

20 years

$494,229

$741,344

$988,458

25 years

$789,544

$1,184,316

$1,579,088

30 years

$1,223,459

$1,835,189

$2,446,918

Data source: Calculations by author.

5. Investing too conservatively

Investing too conservatively is a big mistake that many young people make. Investing in government bonds or bank savings accounts or even in real estate isn’t likely to grow your wealth nearly as much as stocks over the long run. Someone approaching retirement might want to be diversified with bonds and other lower-risk or less-volatile investments, but if you have 20 or 30 years ahead of you, you might want to stick mostly with stocks.

You can get a lot out of the stock market simply by sticking with one or more broad-market index funds. They will deliver the approximate returns of the indexes they track and require very little time or attention from you. The stock market has averaged annual returns of close to 10% over long periods, and a low-fee S&P 500 index fund might offer similar returns with enough time.

6. Not talking money with your future spouse

Many people marry in their thirties, and if you do, be sure to talk about money together — frequently. You want to be on the same page about your financial goals and how you’ll reach them. Otherwise, you might be saving and investing diligently, while your beloved partner is spending heavily and perhaps even racking up debt. Even if you’re still just dating, pay attention to any potential partner’s attitudes and habits regarding money.

7. Not saving for your kids’ college expenses

Finally, if you’re planning to have kids, don’t put off saving for their educational expenses — because college costs a lot these days (it’s underappreciated, though, that many kids do get significant financial aid — so don’t assume that you’ll have to pay the full price).

You can save for your kids’ college in a regular, taxable brokerage account, and you might also want to look into 529 plans, which are expressly for tax-advantaged savings for educational expenses. They also sport steep contribution limits.

Your 30s can be a very exciting decade, and it’s one you can use to set yourself up for great financial security — now and in the future. You can start amassing the assets you’ll need to cover upcoming expenses such as a down payment on a home, college costs, and your eventual retirement. The more you do now, the happier you’ll be down the road.

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