When you’re in your 30s, life can feel like a balancing act. This decade is often full of ambition and long hours, striving to climb the career ladder, enjoy new experiences, and build a lifestyle.
Maybe you’re dreaming of a promotion, a long-awaited vacation, or finally buying a car or an apartment while savouring evenings out with friends at local spots like Vancouver’s Chambar or Guilt & Co. Yet, amidst these goals, it’s easy to overlook financial planning — until one day, the pressure hits.
The hopeful news? You can enjoy all of this while setting yourself up for financial success with a few proactive steps. Your 30s are a pivotal time, and avoiding common money mistakes now can pave the way for a brighter financial future. Some pitfalls to watch for, like:
- Living outside of your means
- Overspending on housing
- Putting off saving
- Accumulating high-interest debts
- Incomplete financial planning
You’ll also hear from Vancity and Aviso wealth advisor, Adrianna St. Denis. Adrianna lent her insight into how people in their 30s can avoid common money mistakes and set themselves up for a bright financial future.
Living outside of your means is amplified by the cost of living and social media.
Our phones are always in our hands. Canadians spend an average of two hours a day on social media platforms, with 24-35-year-olds predominantly making up the demographic.
It’s tough not to get sucked into the glitz and glamour of someone else’s carefully curated online life. But with the cost of living being what it is today, an extravagant lifestyle that looks great on social media isn’t often people’s lived reality.
Finding a balance between enjoying your life and saving for the future is key. A well thought out budget that includes your goals, wants, and needs will help give you transparency into where you should put your money.
“The pressure of living outside of your means is amplified by social media. There’s a lot of exposure to grand lifestyles on highlight Reels, and the lifestyle that people feel like they should have for validation or for their sense of worth and value,” says Adrianna.
People in their 30s are typically in a wealth accumulation and debt deduction phase of their lives. They’re trying to pay off their student loans or vehicles while buying a house and saving for retirement. As the cost of living rises, so do financial pressures. Try not to let social media dictate where you think you should be financially. Speak to a wealth professional instead.
Understand your debt. Prioritize paying off high-interest debt, like credit cards, while making manageable payments on low-interest or no-interest loans, like student debt.
Overspending on housing is hard to avoid.
According to Remax, the average age of a first-time home buyer in Canada is 36. Buying your first home is an exciting milestone, and it’s easy to get carried away maxing out your mortgage. But you don’t want to spend your entire budget on housing and leave nothing left over for living expenses and growing your savings.
Adrianna says, “Maybe their goal is to buy a townhome or a house, so you rent while you’re saving for your dream place. Something I would invite people to consider is, if they have the ability, to get into the housing market sooner rather than later. In this scenario, you’re likely not getting your dream home, but at least you’re building equity in your own property that you can utilize down the road for that dream home rather than paying rent.”
Sometimes, reassessing your goals or timeline can help you achieve what you want. Always discuss your mortgage options with an advisor.
Putting off saving won’t set you up for success.
Pay your future self first before you’re tempted to spend any leftover cash on something else. Small increments add up, especially with compound interest over time, and will go a long way toward helping fund your ideal retirement lifestyle or set up an emergency fund for when you really need it.
“The general rule is to have 3 to 6 months’ worth of fixed expenses set aside,” Adrianna says. “Emergencies are inevitable, and in most cases, the times when you need money the most are the times when obtaining lending is the most challenging.”
You can start small with an amount you won’t miss, like setting an automatic transfer of 10% of each paycheque the day you get paid. You can always adjust the amount as you make more or less money.
“The general rule is to have 3 to 6 months’ worth of fixed expenses set aside. Emergencies are inevitable, and in most cases, the times when you need money the most are the times when obtaining lending is the most challenging.” – Adrianna St. Denis, Wealth Advisor
Accumulating high-interest debt is a slippery slope.
The average amount of debt (not including mortgages) that Canadians have is $17,123 for ages 26-35 and $26,136 for ages 36-45.
While using your credit card can be necessary and even beneficial, paying it off monthly should always be the goal. Carrying high-interest debt isn’t in your best interest; try to focus on not putting more on your credit card than you can pay off.
“Not all debt is created equal,” Adrianna reminds us. “A lot of people think they need to pay off student loans immediately, but if there’s no interest on them, they can be less of a priority compared to high-interest credit card debt. However, it is important to be mindful
that all debt you carry is factored into your debt service ratios, which are tools used to assess your debt capacity when seeking lending.”
Understand your debt. Prioritize paying off high-interest debt, like credit cards, while making manageable payments on low-interest or no-interest loans, like student debt. Being strategic can save you from financial strain and allow you to build up an emergency fund or save for other areas of your life.
Not having a financial plan is a common mistake with an easy fix.
We can’t stress the importance of having a financial plan enough.
If you have an idea of what kind of life you would like to enjoy in the future, a financial strategy can act as your roadmap to getting there. A wealth advisor can help you create one with reasonable steps in place to get you to your goals.
A wealth advisor can also help you to understand the financial landscape. “Financial literacy is so fundamental. But it can be hard to disseminate and understand when you’re doing it by yourself. If you try and Google, sometimes you’re worse for wear just because there’s so much information. And it’s hard to make heads or tails of things,” says Adrianna. She stresses that it’s okay not to have all the answers; that’s where a wealth advisor can help you.
Don’t hesitate to work with a financial advisor. They can help you make informed decisions, set realistic goals, and manage your money effectively. As Adrianna puts it, “Every member I’ve worked with feels better after just having that initial conversation. It helps to reclaim a sense of control over your finances.”
It’s easier with help from the pros.
Your 30s are a time of growth, but they’re also filled with financial challenges. From managing debt to setting realistic goals, being proactive and seeking advice are key to avoiding costly mistakes. Facing your financial reality with a clear plan is the best way to ensure long-term success. Vancity and Aviso Wealth advisors like Adrianna can help. Connect with Vancity to explore solutions for your unique needs.
Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc. The information contained in this article is from sources believed to be reliable; however, we cannot guarantee that it is the information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This information is for informational and educational purposes and is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters. Using borrowed money to finance the purchase of securities involves greater risk than purchasing using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines. Please see our Terms of Use. or complete. This material is not intended to be investment, tax or other advice and should not be relied on without seeking the guidance of a professional to ensure your circumstances are properly considered.
