Financial Planning is a life-long process that begins when you make your first financial decision and even continues after the conclusion of your life,with the disposition of your estate.

It is humbling journey, where the numbers keep everyone honest.

If you want to buy the house – you need the down payment
If you want to stop working- you need a nest egg to draw down from

You either have the dollars or you don’t.

During your 30’s there is a good chance you have solidified your employment, started to grow your family and have even gotten comfortable with the fact that you are real adult and you understand that the future comes quick!

So, to set yourself up for potential financial success, doing financial planning in your 30’s is crucial!

But in reality I do understand that life can get very hectic. There is always something coming down the pike that you have to do.. for work, for your parents, for your friends or for your significant other. And that financial thing, probably will get pushed to the side or even worse..the back of your brain, buried sooooo deep you might not get to it till much much late in life.

That’s when disaster strikes because the longer your financial goals go unfunded (no money earmarked for them) the more EXPENSIVE THEY BECOME!

I do not want that to be you.

And I feel you need help.

So, for you Mr./Mrs. 30 something year old, I have compiled a list of 10 key financial planning mistakes I do not want you to make. And if you stop for a moment in your hectic life and make sure you are DOING all 10, there is a good chance you might just get to the top of the financial mountain!

Financial Planning in Your 30’s
Do Not Make These Mistakes!

Not contribute to the retirement plan at your job
Not contributing to a Roth IRA while you can
Mismanage your cash flow
Lose control of your debt
Not consider life insurance when you are healthy
Not building an investment account for goals that are 10+ years away
Leave too much money in your checking account
Not consider rental real estate or some kind of supplemental income stream
Pay the minimum on your student loans
Invest too conservatively for your long term goals

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The Second list

In reality I can write pages and pages about why making these financial mistakes will cost you dearly.

Why making these mistakes can destroy your financial future and lead you to a life of working forever…..

But like previously written, your life is hectic. So for you here are just the bullets:)

Each Mistake Explained

You need your money to grow. Your money needs time to grow. You need to start contributing to your retirement as early as possible. Using your companies’ retirement plan is an easy way to put your retirement savings on auto-pilot. Also, there is a chance your employer will put some of THEIR money in your account if you put some of YOUR money in there. Start by putting in the most amount you need to get to the most of their money today!

The Roth IRA (my previous post about the Roth IRA) is one of the few TAX FREE vehicles that exists today. The Roth can potentially extend the life of your investment accounts because you do not have to gross up any withdrawal for retirement–example if you need 100k, you only have to take out 100k, In a TAXABLE account you need to take out 142k to net out 100k (30% tax bracket). However, if you make toooo much money the IRS will not allow you to add money to a ROTH IRA. In your 30’s you might be under those limits, so front load if you can!

Cash flow is important to every person/family/business. Running a net positive cash flow is truly the most important piece of the financial planning puzzle. Because the only way you can save, is if there is money left over at the end of the month! If you don’t get a handle on your cash flow at this age, there is no way you will rein it in when the amount of bills you have to manage (mortgage, childcare, health insurance, etc) grows exponentially! (I don’t believe in budgeting, but something instead–check this out!)

Now is the best time of your life to learn to live within your means! It’s OK to use credit cards, I am not against them at all. It’s NOT OK to buy (charge) things you don’t need or can not afford… Misuse of debt can turn that $100 item into $117 after 1 year, $136 after 2 years $160 after 3..etc (17% interest rate)If you can’t pay it off in a 1-3 months, do not buy it!

If you have started a family the best time to buy life insurance is when you are young and healthy. You might think you are invincible but the guy driving the MAC Truck behind you on the freeway might be on the end of a 12 hour shift, and have the chance to prove you wrong. Don’t make the mistake of waiting to long to buy the coverage needed to protect your family.

A breather…

Check your phone or email.. There are still 5 more mistakes I need to go over and I want to have your full attention!

Ok–your back. Let’s keep going!

Any goal that you have that is 10+ years away- the money needed should not be sitting in your bank account or under the mattress. You have to accept SOME volatility and have the markets work for you. In the current low interest rate environment, you will have to save 100% of the money needed if you don’t give it a chance to earn/grow.

Connected to the previouis, a huge mistake is leaving an absurd amount of money in your checking account. In your checking account, your money is not working for you, but instead it’s dying. Checking accounts for the most part, pay no or very little interest. Your emergency money should be a safe account that pays SOMETHING. Online banks are paying around .75% –that’s $750 on $100,000 for doing nothing! (check out BankRate for updated numbers) (not endorsed by IFS)

To have any success with a side project/business the earlier you get it going the more beneficial it can be for you. A side hustle can be in real estate, selling online, turning a hobby into some cash,, etc. During this time of your life you can test and explore without doing HUGE damage to your future. If it’s something you interested in do not wait!

Not everyone has student loans, I get it. But if you do, make sure you are hitting them hard now. Just because they give you 30 years to pay them off, doesn’t mean you should take the offer. The faster they go away, the faster you can focus on the rest of your financial goals.

The last mistake I am warning you about is building an investment portfolio that is tooo conservative for your time horizon and risk tolerance. Maximizing your investments could make or break you financial future. I am not telling you to take the most amount of risk imaginable, but I am telling you to take the most amount of risk YOU CAN HANDLE! Take the time to learn about your investments, understand their risk and volatility and accept the fact that they will go up and down. You are in your 30’s you have the time for portfolio to mature–Let it!