Your 30s are an important time in your financial life. You’re out of college and hopefully grad school—and, if you’re lucky, you escaped without too much debt. You might be on track to start a family, get married or even buy a house.
A lot happens during this decade, making it the easiest time in your life to mess up your finances. So here are four money mistakes to avoid in your 30s and set yourself up for success in your 40s.
1. Not Diversifying Income
If you have a job you love, that’s amazing. We’re not suggesting you quit it right this minute and go find another one. But there’s no reason you can’t have more than one source of income. In fact, it’s extremely important. Diversifying your income gives you a backup plan if something happens, like a layoff or an unexpected career change. Here are some high-paying jobs you can do on the side.
2. Putting Off Retirement Planning
It may seem far away when you’re 30, but retirement (like everything else in life) will arrive in the blink of an eye. It goes without saying, but you should be taking full advantage of your 401(k) plan at work, especially if your employer offers a matching program. You should also set up an IRA, either Roth or traditional, and make recurring contributions.
The sooner you start saving, the more time the money will have to compound. If you invest just $1,000 a year between the ages of 25 and 35, at approximately 7 percent interest a year, you’ll earn nearly $113,000 off of that initial $10,000 investment by the time you’re 65. Just do it.
3. Overspending On Kids
If you’ve just had a baby, congrats! But everyone knows that children are money pits for at least 18 years, and often longer. While they’re babies, be mindful of how much you’re spending on them. A 2-year-old doesn’t care what brand of stroller he falls asleep in. And hand-me-downs are a great option for everything from clothing to toys. Bonus: Not only are hand-me-downs good for your wallet, they’re good for the environment too.
For more tips on how to avoid making money mistakes in your 30s, check out this article. Now go forth and save!