You’ll always be allowed a few mulligans, but by the time you’ve hit the big 3-0, you should have sorted out most of the reckless money habits you may have fallen into in your 20s.
While most of us know what it takes to succeed, we’re all guilty of perpetuating lies about the state of our finances. You don’t want those lies holding you back in the next stage of your life, and into your peak earning years.
So free yourself from these 15 money lies by the time you’re 30.
Mandi Woodruff and Kathleen Elkins contributed to an earlier version of this post.
1. So long as my job pays well, it’s OK if I hate it.
The job market may not be what it used to be, but by age 30 no one should be toiling away at a job that leaves them stressed out and dissatisfied with life. Sometimes you just have to say no, and have the confidence to quit.
We were inspired by a young woman who wrote about turning her back on a lucrative job on Wall Street when years of 14-hour work days made her overweight, burnt out, and miserable.
“I’m a few months into my new job [as an asset manager for a nonprofit] and it’s made my life richer. I’m making an effort to breathe, smile, eat healthier, and have positive thoughts about my future,” she wrote.
“I took a pay cut of about 30% to change positions, but I don’t think that I should be applauded for making the choice to accept less pay – I don’t view it as a sacrifice.”
2. If I turn a blind eye, my finances will figure themselves out.
One of the worst things to do in your early 20s is to ignore financial red flags when they arise.
If you’re broke, you might as well know it and own it. It’s the only way you’ll ever truly be able to do something about it.
3. I should get married because it’s the ‘next step.’
Tying the knot by 30 seems to be the trend these days, but there are few people who can actually afford the high cost of the average American wedding.
Why kick off your lifetime union with a massive pile of debt that will only cause stress and inevitable arguments down the line? If you’re truly in love, chances are The One will still be around by the time you’re both financially fit to face those bills together.
“Impulsiveness in general is typical when you’re younger, whether it’s impulsive decisions to buy the car, go on the vacation, or even marry the wrong person,” certified financial planner Michael Egan tells us. “That’s a big one actually. You need to make sure your spouse, if you’re going to be sharing your life with them, has a similar stance on money to you.”
Start by having these important money conversations with your partner before even getting engaged.
4. Banks and bill collectors will get their way no matter what I do.
At some point, life eventually will get in the way and you’ll find yourself on the wrong side of your bank or, worse, a bill collector.
Stand your ground. Negotiating your way to lower credit rates, car insurance, cable bills, and bank fees is possible, especially if you monitor your accounts dutifully and refuse to take no for an answer.
If you’re ever in doubt, think about Kenny Golde, a 40-something Hollywood producer who managed to negotiate $220,000 worth of debt down to $70,000.
5. I should buy a home because that’s what grown-ups do.
“A lot of times what I see is people will have money saved for a down payment and they end up putting the entire amount toward the down payment to afford the home, and have no money leftover,” says Eric Roberge, CFP and founder of Beyond Your Hammock. Homeownership inevitably comes with hidden costs — maintenance, property taxes, and a mortgage, to name a few — so you shouldn’t crush your savings just to get your hands on a home.
Additionally, it’s not wise to buy a home if you’re after an investment opportunity.
“When you look at the average price increase of a home across the country over the last 100 years, it’s only about 3%,” Roberge says. “If you take away extra costs plus inflation, you’re not really making any money on average on a single family home.”
“A home is a utility, not an investment,” Roberge says.
6. I’m too inexperienced to start investing.
You don’t have to be an expert about personal finance or use fancy economic jargon to start investing. You don’t have to come from an affluent family, and you don’t even have to earn a massive paycheck.
In fact, start by investing in your retirement savings or a low-cost target date fund and you’ll see huge returns in the long run.
Ramit Sethi, author of “I Will Teach You to Be Rich,” did the math: If you put aside just $10 per week, after five years (assuming an average 8% return), you would have $3,295, and after 10 years, you would have $8,136. Putting away $50 a week would result in $16,473 after five years and $40,678 after 10 years.
You can’t mess with the power of compound interest.
7. I should have kids now because I want them.
“There is nothing more destructive to one’s financial future than bringing children into the world without having an established and stable means to support them,” writes finance blogger Len Penzo.
On top of it, there are at least a dozen unexpected costs that come with having kids, so make sure you’re fully prepared — financially and otherwise — before starting a family.
And when you eventually do make the decision to have a kid, consider living on a “baby budget” well before the child’s arrival, suggests Matt Becker of Mom and Dad Money. “Estimate your change in income … then start living on that new budget before your baby is born and put the extra money you’re not actually spending into a savings account,” he says. This way, you’ll save money and learn to live on a little less.
8. If I get approved for new credit, obviously I can handle it.
There may come a time when your credit limit doubles, triples, or even quadruples, especially if you’ve spent a few years dutifully paying down each of your debts.
If your limit increases, you’ve probably earned it, but don’t bite off more than you can chew, and be wary of lifestyle inflation. No matter how big your credit limit, or how fat a mortgage loan your bank offers you for a new home, that doesn’t mean you have to take it.
Know your limits and what you can afford. Then tell them how much you need.
9. I can still afford to eat like I’m 16.
No one can predict the future, but chances are yours involves a body that has far less tolerance for chili cheese fries and 4 a.m. taco runs.
Research shows that as you age, your muscle mass decreases and your fat increases, which ultimately decreases the number of calories your body burns, meaning you don’t need to eat as much.
Junk food may be cheap, but kicking some of your teenage or 20-something eating habits now will save you money in the long run.
You don’t need to whip up five-course meals every day of the week, but a simple meal-planning strategy (like this one from Business Insider’s Emmie Martin) can help you stay on budget and out of the doctor’s office.
10. I’m pretty much invincible.
It’s easy for young people to feel invincible when it comes to health, or to ignore the possibility of a medical emergency. This invincibility complex is costly, as medical bills are the biggest cause of personal bankruptcy. It’s important to plan for the worst, as an unanticipated emergency could turn your financial life upside down instantaneously.
In fact, health insurance is mandatory in the US, and people who choose not to have it are required to pay a fee of 2.5% of your annual household income or $695 per person, per year — whichever is higher.
If your employer doesn’t provide insurance options, you can search for an appropriate policy through Healthcare.gov. And check out the benefits of a Health Savings Account or a Flexible Spending Account to save money on health-related expenses.
11. I’m a failure because I’m not getting paid as much as other people my age.
There’s such thing as healthy competition, but spending every waking moment trying to “beat” your peers on the climb up the corporate ladder is a quick way to wind up alone and miserable.
Further, steer clear of “lifestyle creep,” as financial planner Katie Brewer calls it. “[S]ometimes that becomes harder in your 30s and 40s when you see all your friends buying a nicer house or nice car, and you start thinking, ‘Well why am I not doing that?'”
Do yourself a favor and focus on your own path, not stalking your friends’ career moves on Facebook and LinkedIn. And check out this TED talk by philosopher Alain de Botton, who makes the case for creating your own definition of success.
12. I don’t need to upgrade my wardrobe.
There’s a saying career experts love to toss around: Dress for the job you want, not the job you have.
It makes sense. Unless you’ve managed to finagle your way into your dream job by age 30, part of the battle is making others believe you can handle it.
Leave the flip-flops at home, invest in a wardrobe that shows them you’re ready for responsibility — and the heftier salary that comes with it — and you’re already on your way.
13. If I dip into my savings now, I’ll have plenty of time to make up for it later.
If you’ve managed to build a 401(k) with your employer, now is not the time to start chipping away at all that hard-earned retirement cash.
For starters, you’ll be charged a hefty fee for early withdrawal. It’s also tantamount to stealing from yourself in old age.
When times are tight, trim your spending, reevaluate the purchase you intend to make, or find ways to supplement your income. You’ll thank yourself later on when you see how much your savings grow.
14. I’ll save a bunch of money by buying the cheapest option.
Some things are worth buying secondhand, but not everything.
It’s tempting to try to “save money” by buying inexpensive, low-quality things, but oftentimes those cheap products will cost you in the long run.
Learn to invest in things that have value. They don’t have to be big purchases, either; there are several everyday items that can pay for themselves, and you’ll want to be careful of skimping on things like mattresses, computers, and more.
15. Everything will be work itself out eventually, so I can do whatever I want right now.
While optimism is a good quality to have, too much optimism can be dangerous, especially when it comes to money.
People tend to assume they’ll be making significantly more money in their 40s, explains certified financial planner Michael Egan, which they use to justify overspending in the present moment.
“The rule of thumb should be to live below your means,” emphasizes Egan. “Savings first should be your mentality: Save for retirement first, and spend with whatever is left over. What people typically do is the opposite of that, thinking, ‘I’ve got to buy this, this, and this, and whatever’s left, I’ll save.’ Pay your future first, and make sure your present is secure.”