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The 30s are often referred to as some of the best years of one’s life. Many people in this age range are old enough to have gained some wisdom from life experience, but are still young and healthy enough to live each day to the fullest. Unfortunately there are also some common things 30-somethings can do to jeopardize their finances. Following are some financial pitfalls people in this age range often face, as well as some tips on how to overcome these obstacles and tendencies.


The salary of a 30-something is typically a bit higher than it was during the 20s, so the temptation to overspend may become an issue. As one’s salary gets higher, he or she may automatically start purchasing pricier items to reflect the higher income status. But this act can prevent people from fully enjoying and benefiting from their newfound prosperity.

The modest meals and drinks that satisfied people in their 20s are no longer cutting it into their 30s. Many suddenly feel like they’re entitled to something better. While there’s nothing wrong with splurging every once in awhile, if it becomes a regular habit, it can have a detrimental effect on one’s finances.

Thirty-somethings may also feel they can afford a more expensive car or home than what is really in their price range with the assumption they will be making more in their 40s and beyond. But this decision fails to factor in major life events that often occur in the 30s, such as getting married and having children. Pricey cars in particular are constantly depreciating assets. Every dollar you spend on such an overpriced vehicle could instead be growing for you in savings and investments toward future goals, like retirement. If you can, try to only spend 20 to 25 percent of your income on a car, or even less if you’re good at being frugal.

Credit card woes

With mortgages, car payments and student loan debt obligations each month, it may be tempting for 30-something to put basic lifestyle purchases on credit cards every now and then. Many are living paycheck to paycheck and are struggling to make ends meet each month with the long list of bills their salaries must cover. But think of all the money you’re potentially throwing out the window each month if you don’t pay that balance off. It’s not uncommon for people in their 30s to be paying credit card interest up to 20 or 25 percent.

In February, Bankrate’s Financial Security Index found that more than 26 percent of people ages 30 to 45 had more credit card debt than emergency savings, according to Bankrate’s February Financial Security Index. It’s a vicious cycle. Without adequate savings, unexpected expenses are covered by credit cards, which further plunges one into debt. For 30-somethings that are in this situation, I recommend writing out a strict monthly budget that accounts for every category of spending and sticking to it. Use cash if you have to in order not to overspend in certain areas. Trust me, this may be the only true way of eliminating your credit card debt. One other option is to shift credit card balances to interest-free credit cards, with the goal of paying off those balances before the promotional period ends.

Mortgage payments

I know I already mentioned this one, but it’s worth exploring further. People in their 30s are more likely to have more stable incomes and mature credit histories, but unfortunately this is how many find themselves committing to mortgage payments they can’t really afford.

People that spend the majority of their income on a mortgage and associated housing costs are considered “house poor,” and can quickly find themselves in a very financially dangerous situation.

A common rule of thumb is that you can afford a house that is around 2.5 times your salary, but remember mortgage payments don’t include all the costs involved in owning a home. There are also utilities, homeowners insurance, maintenance costs, property taxes, and homeowners association fees. These are often expenses people don’t initially take into account, and their finances struggle as a result. In fact, just to make payments each month, many 30-somethings neglect other important financial goals such as saving for retirement or contributing to a child’s educational fund.
Instead of asking yourself how much you can afford when it comes to a mortgage, examine how the cost of a new home will fit in with your financial goals. Before committing to a mortgage, create a realistic budget with a monthly cushion that will allow for unexpected expenses. If there’s no wiggle room in your finances and you encounter a life milestone such as adding a new family member, you may feel financially strapped at the end of each month.

The bottom line:

If you’re a 30-something or know a loved one that is in this age range, hopefully the above concepts have served as a warning to avoid overspending on restaurants, credit cards, cars and mortgages. You’ve probably heard the saying that all things are good in moderation, so take that to heart when it comes to your finances. If you create a good budget, finding an appropriate balance between spending and saving, hopefully you’ll be able to enjoy your 30s without the burden of excessive debt.

Author Ron L. Brown, CFP®

Ron is a CERTIFIED FINANCIAL PLANNER™ and President of R.L. Brown Wealth Management. He specializes in retirement, estate, and business planning for professionals and entrepreneurs. Ron assists his clients with creating a financial plan to ensure they are able to live their ideal lifestyle during retirement and leave a strong legacy for their family. Ron has been featured in The Wall Street Journal, US News, Yahoo Finance, Investopedia, and numerous other high profile financial publications.

More posts by Ron L. Brown, CFP®
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