If you’re like many 30-year-olds, you probably spent your 20s finishing up college, finding your first real job, taking some risks, making connections and hopefully having some fun.
Now that you’re in your 30s, you’re moving into a different realm. These are the years to firmly establish yourself in your career and begin climbing the corporate ladder—or perhaps breaking out to forge your own way as a millionaire. You may also be thinking about building a life with a partner, having kids and planning for your long-term future.
This is also the period when many fall into major money pitfalls that sap their finances for years—or even decades—to come. With so much going on with work and life, it’s easy to focus on the here-and-now and put aside your bigger financial goals. However, this will leave you scrambling later in life. Think of this article as a map to help you bypass those monetary gaffes.
Avoid these 10 money mistakes in your 30s, and you will set yourself up for financial freedom in your 40s and beyond.
1. Carrying too much credit card debt.
Credit cards can feel like a solution when you just need a little extra help to get you through to your next paycheck. Credit cards can be a useful tool to help you establish credit and earn points or rewards or allow you to make online purchases. But credit card companies make their money off of your dumb financial mistakes, namely, impulse purchases and buying things you really don’t need.
If you don’t pay your cards off every month or, worse, if you only make the minimum payment, you will end up paying for those items several times over. Credit cards are infamous for their fees, interest rates and hidden rules in their fine print, and it will be difficult for you to catch up once you fall behind.
2. Not diversifying your income.
Most of us treat employment like we would a relationship. We are faithful to a single career or a single employer at a time. We pour all of our time and effort into establishing ourselves in our primary place of work and eschew all else. But when it comes to making money, it’s okay to have something on the side!
In fact, diversifying your income will give you a backup if something happens, and you find yourself out of your primary job. Think of this as a chance to broaden your interests or explore different areas. There are tons of ways to build a second career or money-making venture on the side. Having more than one source of income means more money to invest and save for future projects.
3. Not having a financial plan when you move in with a partner.
It’s no shock that more Americans are waiting longer to get married. And more people are living together before marriage, testing out the waters for long-term cohabitation and companionship. It all sounds wonderful—until you have to decide how to divvy up the bills.
One of the biggest mistakes you can make is not having an honest and open discussion about finances, budgeting, debt and spending habits before you take the plunge and merge your lives. It may feel awkward to have this conversation, but it’s important you understand where you are each at financially and how your monetary habits may differ. Getting on the same page will help keep money concerns from overshadowing and affecting your relationship.
4. Putting off planning for retirement.
It may be hard to focus on retirement when it’s so far off, but your 20s and 30s are the best time to begin growing your nest egg. The earlier you start putting money away, the more time you will have to take advantage of the wonder of compounding: it’s the most powerful way to make your money work for you.
Consider this: if you Php50,000 between the ages of 25 and 35, at approximately 7 percent interest a year, this Php500,000 investment will earn you nearly Php570,000 by the time you are 65 years old. Not bad, right?
5. Overspending on housing expenses.
You can imagine how awesome your life will be when you’re living in that apartment with the view of the river. Or how swanky you would feel to live in a trendy, up-and-coming neighborhood. One out of three Americans make this mistake, and live in a housing market where they are spending more than 30 percent of their income on rent.
Think of it like this: if you take home Php50,000 in income, but spend half on a house, you only have about Php1,700 a day to pay for all the rest of your expenses—not to mention saving for upcoming purchases or investments. Don’t fall into this overspending trap. It will suck away money you could be investing elsewhere and leave you constantly scrambling to cover your expenses.
6. Failing to plan for the worst.
You may be feeling invincible right now, but at some point you may get sick or hurt. According to the Social Security Administration, 1 in 4 of today’s 20-year olds will become disabled for a period of time before reaching age 67. Most people don’t have enough savings to cover months, let alone years, of lost income if they aren’t able to work.
You can protect yourself by purchasing long-term disability insurance, which will help cover your income while you are incapacitated, so you can focus on getting better. To insure about 60 percent of your gross income, expect to pay around 2 to 3 percent of your gross income in annual premiums. Think of this as protection against needing to pull out your investments early or dipping into savings you worked so hard to accumulate.
7. Not getting life insurance while it’s cheap.
Not to be a downer, but eventually we will all meet our demise one way or another. Here’s your friendly reminder that there is no time like the present to make estate plans, and that includes making a will and purchasing life insurance.
One important rule of thumb: the younger you are when you buy a life insurance policy, the less you’ll pay. The healthier you are, the cheaper and easier it is to get coverage. Jump on this bandwagon while you can. A little forethought will give you peace of mind later. You’ll know those you love will be cared for even under the worst of circumstances.
8. Not saving money for upcoming expenses.
While you are busy socking away funds in your retirement accounts, don’t forget to set aside money for other big, upcoming expenses. Someday you’d like to own a house, buy a new car, take a trip around the world or help put your kids through college. These major goals come with big price tags that may seem insurmountable, and they could put you in serious debt.
But a little forethought will go a long way toward making these goals a reality—plus reducing your stress over finances. Set up multiple savings accounts to start setting aside money for specific purchases. Have the money come out through automatic transfers so you won’t miss it.
9. Overspending on kids.
At some point in life, you may find yourself cradling a bundle of joy—a tiny person you are willing to do almost anything for to ensure their safety and happiness. For many people, that includes giving them the absolute best of everything, from top-of-the-line nursery furniture to brand-name clothes.
A word of caution—check your spending before your money disappears into a puff of toys, gadgets and baby accessories. Does your bouncing baby really need that fancy stroller? Or would it be more helpful for you all in the long run if that money went into an investment fund or savings account—or went to pay off debt? Don’t let emotions rule your purchases, for baby or for you.
10. Expecting a standard of living beyond your reach.
No matter your age, it’s easy to covet all the great new things other people seem to have. Many of us have gotten caught up in “keeping up with the Joneses.” But this game isn’t sustainable and doesn’t result in long-term happiness. Trying to keep up with someone else’s standards isn’t going to get you anywhere.
Another pitfall is expecting to live at the same level as your parents are at this phase in your life. Remember that your parents have (hopefully) spent decades accumulating their wealth. You will get there too, if you keep your expectations in check and don’t spend beyond your means now.
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This article originally appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editors.