The biggest financial regrets; it all starts in your 30s14 October by
The biggest financial regrets; it all starts in your 30s
Recently, one of America’s largest life insurers (New York Life) did a survey of over 2,000 people to find out what they considered to be their largest financial mistakes, and how long it took to recover from them.
The key mistakes can be summarised as:
- Not saving soon enough for retirement.
- Relying too much on a credit card.
- Not paying off credit card debt monthly.
- Taking on too much student loan debt.
- Not setting aside enough money for an emergency.
On average, these financial mistakes tend to occur in the 30s. That makes sense. The 30s seem to be the decade of life when many major financial decisions are made. We’ve graduated from university, have a big mortgage, we get married, we have children, and we buy a car less than ten years old (not always in that order). It’s the time of life when we could really use financial discipline and guidance. Yet, ironically, it’s also often a time of life when people seek help the least.
With so many major life events happening, the 30s can be a time when we spend almost every dollar we make. An income that comfortably supported two individuals now needs to stretch to three, four and even five people, and that can be compounded by the added pressure of one spouse moving out of the workforce - or at least cutting back hours - when children are younger.
Then a couple of financial surprises happen, like the car breaking down or a necessary home repair, and you solve it with a little credit card debt… We’ve all seen how this spiral can take hold. It is often around this time when parents get a call for some financial support. If we understand, and can anticipate, the concentration of multiple financial commitments and the associated stress at this life stage, are there steps we can take to relieve some of the pressure?
When dealing with your financial future, the most important element you can prepare for is to expect the unexpected. In other words, plan on the assumption that you’ll get a couple of surprises a year.
Setting up a savings account is one way to deal with any surprise expenses that may arise. An automatic payment can be set up so, as soon as you get paid, a portion of your salary goes directly into that account. Essentially, pay yourself first, before you pay for anything else. Let that money accumulate, knowing that it isn’t there for holidays or household extras, but is set aside specifically for the unexpected. Once your account is larger than about three months’ wages, reward yourself with something nice for the house, or consider additional retirement savings. Either way, you’ll feel a lot better knowing that you have a ‘just in case’ fund available.
While many of these regrets started in ones 30s, it's never too late to take control of your finances.
New Zealand’s gender pay gap is unlikely to be going anywhere anytime soon and the impact of earning less over a lifetime has an enormous effect on a woman’s immediate and future financial security. This is compounded by a lower level of workplace participation, a tendency to seek part-time casual work and bear the bulk of caring responsibilities for children and other family members. So how can women bridge the gap? Here are some tips on how to build wealth and make positive steps towards pay equity and financial independence despite and in spite of the hurdles women face.
Lifetime continues its growth strategy to build a long-term sustainable financial advice business to serve New Zealanders with the joining of One50 Group. The deal adds accounting and property accounting partnerships, general insurance and business advisory services to the Lifetime advice suite.