Don’t Make These 6 Money Mistakes In Your 30s, According To A Pension Expert
Wondering how to get on the road to financial stability?
As the former Head of Pension At JPMorgan Asset Management, I have seen many paths to retirement and the critical steps – or missteps – people have made at every stage of their investment journey.
Here are six key financial mistakes I made to people in their thirties and why you should avoid them:
An emergency fund is key to avoiding debt later in life when retirement planning should be a priority.
Ideally, this account should cover the cost of living for three to six months so you can avoid unexpected events like job loss or costly medical problems.
It is advisable to put your emergency fund in a savings account rather than an investment account so that you can access it right away and not have to worry about a downturn in markets affecting your money holdings.
Many people don’t want to get insurance because they have to pay for something they hope they’ll never use.
But the consequences of not being insured are so great that they can wreck you financially. For example, a medical emergency or an accident at work can change your financial development.
The types of insurance people don’t need to buy but which I highly recommend are:
- Term life insurance, to replace your income for the spouse or children in the event of death.
- Health insurance, to ensure that a large medical bill doesn’t force you into bankruptcy.
- Disability insurance, to ensure that you and your family can maintain your standard of living when you are injured or unable to work.
- Pension insurance, If you don’t own your home, you can replace your belongings in the event of theft or damage from fire, flood, or other disaster.
If you have a high interest student loan (at a Interest rate over 5.8%), Personal loans, or credit card debt, I always recommend paying these down as aggressively as you can before focusing on low-interest student loans, auto loans, or a mortgage.
In fact, on cheaper loans, it can make sense to only make the minimum payments until you get rid of the expensive loans. The faster you can pay these off, the more money you will have to spend on other financial goals that become more important as you age in your 30s.
4. Buying too much house
With property prices soaring this year, the temptation is to stretch out and take out a bigger mortgage than you expected. But you have to make sure your The housing budget includes room for things like unexpected repairs, maintenance, and possible changes in your future income if you start a family.
Home ownership is enjoyable and can lead to wealth creation, but that is not guaranteed. What is guaranteed, however, is that you will have to spend a lot more on your home than just paying the mortgage.
When you’re in your 30s, retirement may seem a long way off. But every dollar you save for retirement now has 10 to 20 more years to accumulate than the money you saved in your 40s and 50s.
If you work for an employer on a 401 (k) or 403 (b) plan, you will save at least enough to get the employer match. It is the only guaranteed return on your savings you will ever get. If your job doesn’t offer a 401 (k) plan, set up an IRA to automatically transfer money from your checking account on payday.
If you fail to make the most of the contributions you can make, promise yourself that every time you get a raise, you will increase the amount you save.
Once you become a parent, it is very natural that you want to put your children’s needs before your own. But saving for your children’s college education before you save for your own retirement is a big mistake.
There are many ways to pay college such as: B. Scholarships and choosing cheaper schools or loans. One of my children attended a public university and the other received academic scholarships from a number of schools. But there is no other way to pay for retirement other than to save.
Anne Lester is the former Head of Retirement Solutions for JPMorgan Asset Management’s Solutions Group, where she advanced the company’s market-leading retirement product offerings and thought leadership agenda, developing investment products that incorporate anonymized data and insights from behavioral economics. Follow her on Instagram @savesmartwanne.
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