Learn More About Money Mistakes to Avoid in your 30s

Tonight we get into our personal finance topic, talking about money mistakes to avoid in your 30s. CEO at CrueInvest, Craig Torr, joins us for tonight’s topic. Let’s define what money mistakes are.

CRAIG TORR: Those are your typical mistakes that you tend to make early on in life and just continue making those bad decisions and they obviously compound upon one another through a lifetime.

TUMISANG NDLOVU: What then are some of the most common money mistakes made by those in this particular age group, and I speak for myself at this tender age of 32.

CRAIG TORR: I think the one that jumps out at us is the cost of the wedding and that tends to set most married couples back quite far in their financial planning. There’s a lot of pressure obviously to live up to expectations of it being a great day and family involved and so on but one needs to be quite careful about the costs involved in putting that day together.

TUMISANG NDLOVU: The advice then there would be how do you then say no to pleasing everybody else and pleasing your own pocket to ensure that going forward you don’t actually run into a ditch where money is concerned?

CRAIG TORR: I think it’s about communication and being open and honest and having those discussions in advance and also involving the family, depending on who’s going to be paying for the wedding as well. It differs from scenario to scenario but all too often we see young couples really overdoing it on that wedding, possibly where the parents are not in a financial position to assist to the extent that they would like to. So it’s really about communication and affordability, those would be the two important issues to take into consideration.

TUMISANG NDLOVU: Still on the big expenses in terms of one’s life at this stage of 30 going upwards, things such as cars or your first property, how do you then make sure that you navigate around this and don’t make mistakes in this particular process?

CRAIG TORR: I think again the car and the property are two very different decisions, the property is very much a lifestyle decision, there’s a lot of emotion attached to it, it’s typically the home that you are going to raise kids in and so on. We’d be more comfortable to stretch the budget on that one as opposed to the cars, where those cars are depreciating assets that cost a considerable amount of money. So if we were to compromise on one we would look at advising to rather compromise on the car than on the house because failure to do so could result in you having to move more often than is necessary and that also comes with its built-in costs.

TUMISANG NDLOVU: What’s there to be said then about the small stuff, I know one of my bad habits is coffee, biltong that I don’t really need and when you calculate the cost of this at the end of each month you realise that you’ve spent quite a lot of money. Cigarettes are also an issue, it’s a lot of money if you calculate it over 12 months.

CRAIG TORR: Absolutely, I think you’ve hit the nail on the head, you do need to be cognisant of those little things like the day-to-day expenses, the cool drinks, the sandwiches that could all be reduced by planning a little better, making your own food or whatever it might be, maybe eating more healthy and so on.

I think the other way to do it is to have a plan and save first, pay your future-self first, in other words make sure that you are saving enough and then there’s less stress on what you do with what is left over if you do it that way around.

That’s typically the way most people end up saving comfortably and confidently for their future. If we had to save what we had left at the end of the month I don’t think too many of us would do a fantastic job of saving.

Saving before spending is essential

TUMISANG NDLOVU: Would you say that there is an increase in the trend of paying your future-self first as opposed to the common money mistakes that are continuously made?

CRAIG TORR: I wouldn’t say necessarily an increase, we’d like to see an increase in that behaviour because it ultimately serves that individual best to pay their future-self first and that’s done automatically if you’re a member of the compulsory pension fund. But typically we find that where more and more people are working for themselves, working from home and there is no formal corporate pension fund that they belong to so they need to do it themselves and a lot of those people are delaying it and putting it off and thinking they’ll start next year or whenever it might be.

That just compounds the problem because the consequence very often of doing that is also that they are spending at the level at which they are earning or even worse, beyond that level and in which case they are doing it on credit, which then compounds the problem and you have interest working against you rather than working for you.

TUMISANG NDLOVU: Having said that, is it acceptable at the age of 30 plus for one to still be making common money mistakes? Can one afford to make mistakes at that age when you are supposed to be making decisions about your future-self, as well as looking towards saving enough for retirement?

CRAIG TORR: I think if we can lessen the number of mistakes we make or avoid them completely that would obviously improve the situation. Every mistake that one makes does come with its consequences. Financial literacy is about trying to ensure that people make less of those mistakes, those mistakes are mostly made because of instant gratification, we want to meet those needs as opposed to delayed gratification. That’s very difficult because every prat of the media is trying to get us to part with our money and at the end of the day the delayed gratification or paying one’s future-self first great antithesis of that. So one has got to be mindful of the media trying to get us to part with our money and really looking after ourselves in the future.

TUMISANG NDLOVU: As a parting shot what advice would you like to leave with our listeners on tonight’s topic?

CRAIG TORR: I think just to have a plan in place and at least have an idea of what one should be saving and then begin with that in mind, pay your future-self first, put a lot less pressure on yourself for those months where you do perhaps want to go out and spend or splurge on something. If you have your savings taken care of, if you have your risk – something we haven’t spoken about – taken care of and your life and disability cover in place then the negative implication of a spend is to a large degree mitigated, so I would always say have a plan in place and once you’ve got that then the rest will become easy if you follow the plan.